31/ /I T/ff/s/^ $7-, e* AA Gi?l0££. ..• "••••••« ^.. UNIVERSITY OF CALIFORNIA LOS ANGELES LAW LIBRARY • A SELECTION OE CASES ON THE LAW OF SURETYSHIP BY JAMES BARE AMES BUSSEY PROFESSOR OF LAW IN HARVARD UNIVERSITY CAMBRIDGE HARVARD UNIVERSITY PRESS Copyright, 1900 By JAMES BARR AMES ' CONTENTS. CHAPTER I. PAGE Nature of the Contract of Suretyship . . 1 Section I. Suretyship in the Form of a Collateral Undertaking, or Guaranty ... 1 Section II. Suretyship in the Form of an Independent or Absolute Undertaking . . 99 CHAPTER II. Surety's Defences against the Creditor 108 Section I. Defences based on the Absence of any Liability of the Principal Debtor to the Creditor 108 Section II. Defences based upon the Extinguishment or Suspension of the Liability of the Principal Debtor to the Creditor 131 Section III. Defences based upon the Principal Debtor's Right of Set-off or Counter- claim against the Creditor 184 Section IV. Surrender or Loss of Securities by the Creditor 192 Section V. Creditor's Failure to use Money within his Control in Lawful Payment of his Claim 217 Section VI. Failure of the Creditor to sue the Debtor at the Surety's Request . . . 221 Section VII. No Notice to Guarantor of Acceptance of the Guaranty 225 Section VIII. No Notice to Guarantor of Default of Principal Debtor 238 Section IX. Alteration of Principal's Contract, or Variation of Surety's Risk .... 243 IV CONTENTS. Section X. Non-disclosure by Obligee of Facts which he ought to reveal to the Surety 275 Section XI. Retention of Principal in Service after Knowledge of his Dishonesty . . 295 Section XII. Fraud or other Misconduct of Principal towards Surety 305 Section XIII. Surety's Defences growing out of Dealings or Relations between the Cred- itor and Co-surety 319 Section XIV. Effect of Accident, Notice of Revocation, Death of the Surety, or Default of the Principal, upon the Continuance of the Obligation of Suretyship . 330 CHAPTER III. The Surety's Rights 357 Section I. Subrogation to the Rights of the Creditor 357 Section II. Indemnity 498 Section III. Contribution 533 Section IV. Exoneration 583 CHAPTER IV. Creditor's Rights to Surety's Securities 620 TABLE OF CASES Abbot, Bank of Salina v. Addyman, Beckett v. Aikin. Mathews v. Ames v. Foster Ames v. Maclay Andrews, Butcher v. Amiable, Rnssell v. Anstey v. Harden Appleton v. Bascom Armstrong-, Hodges v. Aston, Sanderson v. Atkinson, Ex parte Auchampaugh v. Schmidt Ayers v. Burns Bachelder, Sumner v. Baily's Est. Baker v- Kennett Bank of Salina v. Abbot ■ Bank of Scotland, Smith v. Barclay v. Gooch Bardwell v. Lydall v. Barker v. Bucklin Barker, Price v. Barneby, Somersall v. Bascom, Appleton v. Batard v. Hawes Bateman. Mallet v. Baxter, In re Beal v. Brown Beardmore v. Cruttenden Beavan, Bushell v. Bechervaise v. Lewis Beckett v. Addyman Beers, Swift v. Belknap v. Bender Bell v. Jasper Bender, Belknap v. Benson, Wood v. Bird v. Gammon Bishop, Pidcock v. Bittick v. Wilkins Black, Carter v. Black, Sherman v. Black, Waldrip v. Blake v. Traders' Bank Blanchard, Dexter v. Blanchard, Gibbs v. Bolenius, Eshleman v. Borland, Phelps v. Bostwick v. Van Voorhis Bourne, Dowbiggen v Bowers Est. Boyd, Dock v. Page Paga 386 Brabason, Casey v. 102 353 Brackett v. Rich 615 445 Bradbury v. Morgan 340 85 Bradford Co., Rouse v. 1(14 139 Bradley v. Burwell 560 11 Briddock, Parsons v. 476 114 Brigham, In re 378 55 Brinson v. Thomas 368 49-: ) Broderick, Chester v. 477 522 Brookbank v. Taylor 238 252 Brown, Beal v. 506 37s Brown v. Curtiss 62 136 Brown, Risley v. 331 521 Brownlee, Fulkerson v. 359 Brunskill, Holme v. 256 645 Bucklin, Barker v. 37 603 Bnckmyr v. Darnall 12 111 Burns, Ayers v. 521 386 Burns v. Parish 509 275 Burwell, Bradley v. 560 502 Bushell v. Beavan 21 428 Buss, Pledge v. 194 37 Butcher v. Andrews 11 147 Butler, Capel v. 204 225 Butler, Guild v. 132 499 Butler v. United States 312 538 56 Calvert v. London Co. 266 424 Cambridge Bank v. Hyde 261 506 Capel v. Butler 204 607 Cardell v. McNeil 61 21 Carpenter v. Minter '397 188 Carr v. Ladd 337 353 Carter v. Black 528 121 Casey v. Brabason 102 42 Chambers, Midland Co. v. 435 547 ( lhambers, Sawyer v. 128 42 Charnock, Fleetwood v. 533 94 Chase, Goodman v. 27 29 Chester v. Broderick 477 276 Chicago Co. v. Glenny 464 367 Christie. Paul v. 131 528 Church p. Swope 494 485 Clark v. Sickler 217 398 Clark v. Thayer 333 365 Clayton, Sheffield Co. v. 633 26 Clementson, Coulthart v. 343 4 Coates v. Coates 206 5S1 Coles, Hulme v. 177 214 Commercial Bank, Royal Bank v. 625 291 Commonwealth v. Straton 372 376 Cook, Thomas v. 48 408 Cooke, Petty v. 143 40 Coope v. Twynam 551 VI TABLE OF CASES. Cooper, Davidson v. 243 Cooper, Ellesmere Co. v. 247 Cooper v. Jenkins 465 Cooper, Jones v. 2 Copis i>. Middleton 381 Cosgrove v. McKasy 601 CottrelTs App. 408 Coulthart v. Clementson 343 Cowell v. Edwards 536 Cragoe v. Jones 145 Craythorne v. Swinburne 482 Cresswell, Green v. 49 Cromer v. Cromer 388 Cruttenden, Beardmore v. 607 Cunningham, Osborn v. 527 Curtiss, Brown v. 62 Daniels, Thayer v. 517 Darley, English v. 152 Darnall, Buckmyr v. 12 Davey v. Prendergrass 155 Davidson v. Cooper 243 Davies v. Humphreys 541 Davies, Turner v. 481 Davis v. Emerson 553 Davis v. Patrick 89 Davis v. Toulmin 580 Davis v. Wells 228 Day, Holmes v. 480 Deacon, Pearl v. 192 Decker v. Pope 499 Deering v. Winchelsea 544 Devey, Prendergast v. 178 Dexter v. Blanehard 26 Dickson, Musgrave v. 466 Dinkgrave's Succ. 469 Dixon, Steel v. 566 Dobbins, Jordan v. 347 Dobie v. Fidelity Co. 598 Dock v. Boyd 40 Dodd v. Winn 327 Dougbty, Queen v. 378 Douglass's App. 467 Dowbiggen v. Bourne 376 Dows v. Swett 64 Drew v. Lockett 404 Dudlow, Wildes v. 52 Duncan v. North Wales Bank 453 Dunn v. Parsons 199 Eastwood v. Kenyon 32 Edwards, Cowell v. 536 Ellesmere Co. v. Cooper 247 Ellis v. Emmanuel 437 Emerson, Davis v. 553 Emmanuel, Ellis v. 437 English v. Darley 152 Eshleman v. Bolenius 581 Everett, Polak v. 207 Ewin v. Lancaster 162 Fentum r. Pocock 157 Ferguson, Leake v. 471 Fewlass v. Keeshan 339 Fidelity Co., Dobie v. 598 Fleetwood v. Charnock 533 Fletcher, New York State Bank v. 475 Forbes v. Jackson 410 Ford v. Stobridge Foster, Ames v. Fothergill, In re Fowler v. Strickland Foxall, Phillips v. Foye, In re Foyer, Macdougall v. Frazer v. Jordan Fulkerson v. Brownlee Fuller, Gould v. Fuller v. Tomlinson Furbish v. Goodnow Gammon, Bird v. Geagan, Manley v. Gibbs v. Blanehard Gifford, Ex parte Giglis v. Welby Gill, Tomlinson v. Gillespie v. Torrance Gillett, Mallory v. Glenny, Chicago Co. v. Goddard v. Whyte Gooch, Barclay v. Goodman v. Chase Goodnow, Furbish v. Goodrich, Tom v. Gosserand v. Lacour Gould v. Fuller Grant, Hare v. Gray v. Seckham Green v. Cresswell Grey, Sutton v. Griffith v. SitgTeaves Griswold, Hazard v. Grover, Towne v. Grover Co., Wright v. Grubbs v. Wysor Guild v. Butler Gullick, Wolmershausen v, Hackett. Ward v. Hall, Whiteher v. Hammell, Stone v. Hampton v. Phipps Harding v. Tiff't Hare v. Grant Hargreaves v. Parsons Harlin, Powers Co. v. Harper, Lloyd's v. Harradine, Pooley v. Harrah v. Jacobs Harrison, Maure v. Harrison v. Sawtel Hart, Hubbard v. Hart v. Longfield Hatch, Miller v. Hawes, Batard v. Hay<;s, Ranelaugh v. Hayes v. Ward Hazard v. Griswold Hill v. King Hitchman v. Stewart Hodges v. Armstrong Holme v. Brnnskill Holmes v. I >ay Holzer, Pierce v. Hoppes v. Hoppes 498 85 422 470 295 638 101 172 359 578 202 33 29 104 4 319 583 31 184 76 464 357 502 27 33 507 323 578 525 431 49 70 126 125 22 401 413 132 58? 305 251 514 647 315 525 60 293 335 159 393 620 54 180 9 175 538 596 608 125 389 554 522 256 480 362 613 TABLE OF CASES. vu Horton, Richardson v. Hotham v. Stone Howarth, Samuel v. Howes v. Martin Hubbard v. Hart Hulme v. Coles Humphreys, Davies v. Hungerford v. O'Brien Hunt, National Bank v. Hunt v. Roberts Hyde, Cambridge Bank v. Jackson's A pp. Jackson, Forbes v. Jacobs, Harrah v. Jarvis v. Wilson Jasper, Bell v. Jenkins, Cooper v. Johnson, Offley v. Jones v. Cooper Jones, Cragoe v. Jones, Lee v. Jones v. Orchard Jones v. Quinnipiack Bank Jones v. Thayer Jones v. Ward Jordan v. Dobbins Jordan, Frazer v. Kaighn, Paulin v. Keeshan, Fewlass v. Kennett, Baker v. Kenyon, Eastwood v. Kidman, Sison v. Kimball v. Newell King, Hill v. Kingsbury v. Westfall Kii'by v. Landis Kirkham v. Marter Klingensmith v. Klingensmith Knepper, Wright v. Koehler, Prime v. Koelsch v. Mixer Koppel, Wolff v. Lack, Thompson v. Lacour, Gosserand v. Ladd, Carr v. Lakeman v. Mountstephen Lancaster, Ewin v. Landis, Kirby v. Layer v. Nelson Leake v. Ferguson Lee v. Jones Lee v. Yandell Leper, Williams v. Lewis, Bechervaise v. Lidderdale v. Robinson Lloyd, North British Co. u. Lloyd's v. Harper Loekett, Drew v. London Co., Calvert v. Longfield, Hart v. Loosemore v. Radford Lucas v. Owens Lydall, Bardwell v. Macdougall v. Foyer 137 380 153 4(i 180 177 541 239 ■350 355 261 603 410 393 106 547 465 587 2 145 283 530 641 116 151 347 172 571 339 111 32 99 108 389 264 179 23 325 197 87 563 67 322 323 337 14 162 179 498 471 283 112 72 188 384 280 335 404 26(5 9 606 314 428 101 Mace v. Wells 515 Mack, Uzzell v. 360 Maclay, Ames v. 139 Maclure, Yorkshire Co. y. 118 Magruder, M'Donald v. 488 Mahurin v. Pearson 190 Maine, Pray v. 400 Mallet v. Bateman 56 Mallory v. Gillett 76 Manley v. Geagan 104 Marden, Anstey v. 55 Marsh v. Pike 443 Marshall, Ex parte 416 Marshall, Murray v. 168 Marter, Kirkham v. 23 Martin, Howes v. 46 Mathews v. Aikin 445 Mathews, Railton v. 277 Maure v. Harrison 620 Maynard v. Morse 236 McAllaster, Sibley v. 511 McAllister, Titcomb v. 577 Mc Bride v. Potter J^ovell Co. 549 M'Donald v. Magruder 488 MTver v. Richardson 227 McKasy, Cosgrove v. 601 M'Myn, In re 383 McNiel, Cardell v. 61 Mease v. Wagner 20 Merritt, Richardson u. 599 Metz v. Todd 171 Middleton, Copis v. 381 Midland Co. v. Chambers 435 Miller v. Hatch 175 Millikin, Stoner v. 310 Minter, Carpenter v. 397 Mixer, Koelsch v. 563 Morgan, Bradbury v. 340 Morgan v. Seymour 587 Morris, Ex parte 638 Morrison, Warner v. 504 Morse, Maynard v. 236 Moulton v. Posten 181 Mountstephen, Lakeman v- 14 Murray v. Marshall 168 Musgrave v. Dickson 466 Nash, Neal v. 394 Nash, Read v. 25 National Bank v. Hunt 350 National Bank v. Smith 219 Neal v. Nash • 394 Nelson, Layer v. 498 Newcomb v. Raynor 213 Newell, Kimball v. 108 New York Bank v. Fletcher 475 North British Co. v. Lloyd 280 North Wales Bank, Duncan v. 453 O'Brien, Hungerford v. 239 Offley v. Johnson 587 Orchard, Jones v. 530 Osborn v. Cunningham 527 Owen, Williams v. 409 Owens, Lucas v. 314 Pace v. Pace 448 Packard. Pain v. 221 Vlll TABLE OF CASES. Pain v. Packard 221 ! Palmer, Villars v. 135 Parish, Burns v. 509 Parsons v. Briddock 476 Parsons, Dunn v. 199 Parsons, Hargreaves v. 60 Patrick, Davis v. 89 Paul v. Christie 131 Paulin v. Kaighn 571 Pearl v. Deacon 192 Pearson, Mahurin v. 190 Perkins, Watkins v. 11 Peter v. Rich 533 Petty v. Cooke 143! Phelps v. Borland 214 Philhrick v. IShaw 370 Phillips v. Foxall 295 Phipps. Hampton v. 647 Pidcoek v. Bishop 276 Pierce v. Holzer 362 Pierce v. Williams 524 Pike, Marsh v. 443 Pledge v. Buss 194 Pocock, Fentum v. 157 Polak v- Everett 207 Pooley v. Harradine 159, Pope, Decker v. 499 Poster, Moulton v. 181 Potter-Lovell Co., McBride v. 549 Powers Co. v. Harlin 293 Pray v. Maine 400 Prendergast v. Devey 178 Prendergrass, Davey v. 155 Preston v. Preston 473 Price v. Barker 147 Prime v. Koehler 87 Putnam v. Schuyler 122 Queen v. Doughty 378 Quinnipiack Bank, Jones v. 641 Raahe v. Squier 93 Radford, Loosemore v. 606 Railton v. Mathews 277 Randall v. Rigby 96 Ranelaugh v. Hayes 596 Raynor, Newcomb v. 213 Read v. Nash 25 Regina v. Robinson 375 Reynolds v. Wheeler 492 Rich, Brackett v. 615 Rich, Peter v. 533 Richardson v. Horton 137 Richardson v. Merritt 599 Richardson, M'lver v. 227 Rigby, Randall v. 96 Risley v. Brown 331 Roberts, Hunt v. 355 Robinson, Lidderdale v. 384 Robinson, Regina v. 375 Rogers, Tobias v. 557 Rouse v. Bradford Co. 164 Royal Bank v. Commercial Bank 625 Rozer v. Rozer 1 Rushforth, Ex parte 418 Russell v. Annable 114 IKS Sanders v. Weelburg Sanderson v. Aston Sawtel, Harrison v. Sawyer v. Chambers Schmidt, Auchampaugh v. Schuyler, Putnam v. Scot v. Stephenson Seckham, Gray v. Seymour, Morgan v. Shandois v. iSimson Shaw, Philhrick v. Sheffield Co. i». Clayton Sherman v. Black Shnttleworth, Watts v. ISibley v. McAllaster Sickler, Clark v. Simmons, Watertown Co. v. Simson, Shandois v. Sison v. Kidman Sitgreaves, Griffith v. Sleigh v. Sleigh Smith v. Bank of Scotland Smith, National Bank v. Smith v. Swain Somersall v. Barneby Sooy, State v. Souther, In re Squier. Raabe v. Staney, Underwood v. State v. Sooy State v. Swinney Steel v. Dixon Steele, Wood v. Stephenson. Scot v. Stewart, Hitchman v. Stobridge, Ford v. Stone v. Hammell Stone, Hotham v. Stoner v. Millikin Straton, Commonwealth v. Strickland, Fowler v. Sumner v. Bachelder Sutton v. Grey Swain, Smith v. Swain v. Wall Swett, Dows v. Swift v. Beers Swinburne, Craythorne v. Swinney, State v. Swope, Church v. Talcott, Ex parte Taylor, Brookbank v. Thayer, Clark v. Thayer v. Daniels Thayer, Jones v. Thomas, Brinson v. Thomas v. Cook Thompson v. Lack Thorne, Trimble v. Tifft, Harding v. Titcomb v. McAllister Tobias v. Rogers Todd, Metz v. Tom v. Goodrich Tomlinson, Fuller v. Tomlinson v. Gill Torrance, Gillespie v. 574 252 54 129 136 122 498 431 587 10 370 633 485 269 511 217 302 10 99 126 519 275 219 392 225 288 426 93 330 288 273 566 244 498 554 498 514 380 310 372 470 645 70 392 535 64 121 482 273 494 426 288 333 517 116 368 48 322 223 315 577 557 171 507 202 31 184 TABLE OF CASES. IX Toulmin, Davis v. 580 Towne v. Grover 22 Traders' Bank, Blake v. 365 Trimble v. Thome 223 Turner, Ex parte 418 Turner v. Davies 481 Turquand, Ex parte 422 Twynam, Coope v. 551 Underwood v. Staney 330 United States, Butler u. 312 Uzzell v. Mack 360 Van Voorhis, Bostwick v. 291 Villars v. Palmer 135 Wackerbath, Ex parte 496 Wagner, Mease v. 20 Waldrip v. Black 398 Walker, In re 633 Wall, Swain v. 535 Ward v. Hackett 305 Ward, Hayes v. 60S Ward, Jones v. 151 Waring 1 , Ex parte 621 Warner v. Morrison 504 Watertown Co. v. Simmons 302 Watkins v. Perkins 11 Watts v. Shuttle worth 269 Weelburg, Sanders v. 674 Welby, Giglis v. 583 Wells, Davis v. 228 Wells, Mace v. 515 Westfall, Kingsbury v. 264 Wheeler, Reynolds v. 491' Whitcher v. Hall 251 Whyte, Goddard v. 357 Wilbur v. Williams 211 Wildes v. Dudlow 52 Wilkins, Bittick v. 367 Williams v. Leper 72 Williams v. Owen 409 Williams, Pierce v. 524 Williams, Wilbur u. 211 Wilson, Jarvis v. 106 Winchelsea, Deering v. 544 Winn, Dodd v. 327 Wolff v. Koppel 67 Wolmershausen v. Gullick 588 Wood, Ex parte 417 Wood v. Benson 94 Wood v. Steele 244 Wormleighton's Case 533 Wright v. Grover Co. 401 Wright v. Knepper 197 Wysor, Grubbs v. 413 Yandell, lee v. 112 Yorkshire Co. v. Maclure 118 CASES ON SURETYSHIP. CHAPTER I. NATURE OF THE CONTRACT OF SURETYSHIP, SECTION I. Suretyship in the Form of a Collateral Undertaking, or Guaranty, ROZER v. ROZER. In the Common Pleas, Trinity Term, 1681. [Reported in 2 Ventris, 36.] An Indebitatus Assumpsit pro parcelV Corii ad specialem instan- tiam & requisitionem of the defendant, sold and delivered to J. 8. JEt sic inde Indebitaf existens the defendant promised to pa}'. Upon non assumpsit pleaded, and a verdict for the plaintiff, it was moved in arrest of judgment that there is no promise laid, and no reason to presume a promise, when 'tis the very ground of the action, (though after a verdict. And admitting there were a promise ; yet it being collateral it did not make a debt, but should have been brought as an action upon the case. 1 Mo. 702, and Dyer, 230. And hereupon judgment was stayed. Though (as I hear) in the King Bench about two years since, between Danbey and Kent, they held such a case well enough after a verdict. Qucere. 1 Y. B. 27 Hen. VIII. 25-33, per Fitzjames, C. J. Hinson v. Burridge, Moo. 701 ; Cogan v. Green, 1 Roll. Ab. 594; Anon., 1 Vent. 293 ; Mires v. Sculthorpe, 2 Camp. 215 ; Rains v. Storry, 3 C. & P. 130, Accord. Kent v. Derby, 1 Vent. 311 ; 3 Keb. 756 s. c. (overruled) ; Kansas Co. v. Smith, 36 Mo. Ap. 608, 622 (semble), Contra. But if exclusive credit be given by A to B for goods delivered to C, B is liable in debt or indebitatus assumpsit for goods sold. Watson v. Porael, 1 58 Pa. 513. — Ed. 1 JONES V. COOPER. [CHAP. 1 JONES v. COOPER. In the King's Bench, November 25, 1774. [Reported in Cowper, 227.] This was an action for goods sold and delivered at the instance of the defendant. Plea, non assumpsit, and verdict for the defendant. Upon a rule to show cause why a new trial should not be granted, the case appeared from the report of Mr. Justice Nares, who tried the cause, to be shortly this : The defendant had frequently given written orders to the plaintiff to deliver goods of different kinds to one Smith, her son-in-law ; in all of which she undertook to be answerable for the payment. These had been all punctually discharged. But the goods upon which the present question arose were delivered to Smith, in con- sequence of a parol order and a parol promise by the defendant in these words, " I will pay you, if Smith will not." — That the undertaking was before the delivery of the goods ; but that Smith was entered as the debtor in the plaintiff's books. Mr. Mansfield and Mr. Duller, in support of the rule. The single question is. Whether the promise which is the ground of the plaintiff's action is to be considered as a collateral promise within the Statute of Frauds ; or whether it is not an original undertaking upon the credit of which the goods were supplied to Smith? The words of the stat. 29 Car. 2, c. 3, are, " That no action shall be brought whereby to charge a person upon an}' special promise to an- swer for the debt or default of another, unless the agreement upon which such action is brought, shall be in writing." This is not an undertaking for the debt of another ; but an original contract upon the confidence of which the debt first accrued : therefore not within the statute ; and so it was held in Mawbrey v. Cunningham, Sittings after Hil. Term, 1773. There goods were delivered to A, at the request of B, who said he would see them paid for. Lord Mansfield held, that as the promise was before delivery of the goods, it was not within the statute, because at the time of the promise there was no debt at all. Mr. Dunning, contra. The case cited was for goods sold at the defendant's request, and a promise by the defendant to pay for them. No doubt if goods be delivered to A, upon the request of B, and B promises to pay for them, they are goods sold to B. But in the present case, the defendant was to pa}- only in case Smith (to whom the goods were sent) did not pay for them ; it is therefore a conditional promise. Smith was made debtor for them, and considered as such by the plain- tiff, and therefore he should have used due diligence to recover against Smith before he had recourse to the defendant. Lord Mansfield. The general distinction is a clear one, and upon that distinction the case which has been cited was determined. Where SECT. I.] JONES V. COOPER. 3 the undertaking is before delivery, and there is a direction to deliver the goods, and " I will see them paid for," it is not within the Statute of Frauds. 1 But there may be a nicety where the undertaking is before deliver}', and yet conditional as this is. It turns singly upon the un- dertaking being in case the other did not pay. We will look into it. The next day Lord Mansfield delivered the unanimous opinion of the Court as follows : — We are all of opinion upon the authority of the cases in the books, that the promise by the defendant in this case to pay, if Smith did not, is a collateral undertaking within the Statute of Frauds ; and it is so clear that it would only be misspending time to go through the cases, or to say much about it. Mule for a new trial discharged.'' 1 The opinion of the Court in Perley v. Spring, 12 Mass. 297, 299, to the same effect, was overruled in Cahill v. Bigelow, 18 Pick. 369, 371. See also Rogers v. Kneeland, 13 Wend. 114, 121 ; Matthews v. Milton, 4 Yerg. 576, 578; Mead o. Watson, 57 Vt. 426. — Ed. - Parsons v. Walker, 3 Doug. 14 n. (c); Peckham v. Faria, 3 Doug. 13; Matson v. Wharam, 2 T. R. 80; Anderson v. Hayman, 1 H. Bl. 120; Keate v. Temple, 1 B. & P. 158; Boykins v. Dohlonde, 37 Ala. 577; Webb v. Hawkins Co., 101 Ala. 630; Harris v. Frank, 81 Cal. 280; Ruggles v. Gatton, 50 111. 412 ; Pettit v. Braden, 55 Ind. 201 ; Wills v. Ross, 77 Ind. 1 ; Langdon v, Richardson, 58 Iowa, 610; Blake v. Parlin, 22 Me. 395 ; Moses v. Norton, 36 Me. 113; Conolly v. Kettlewell, 1 Gill, 260; Norris v. Graham, 33 Md. 56; Cahill v. Bigelow, 18 Pick. 369; Hill v. Raymond, 3 All. 540: Swift v. Pierce, 13 All. 136; Gill v. Herrick, 111 Mass. 501 ; Barrett v. McHugh, 128 Mass. 165; Bugbee v. Kendricken, 130 Mass. 437; Welch v. Marvin, 36 Mich. 59; Hagadorn v. Stronach Co., 81 Mich. 56; Cole v. Hutchinson, 34 Minn. 410; Maurin v. Fogelberg, 37 Minn. 23 ; Walker v. Richards, 39 N. H. 259 ; Rothmau v. Fix, 25 Mo. • Ap. 571 ; Price v. Chicago Co., 40 Mo. Ap. 189; Osboru v. Emery, 51 Mo. Ap. 408; Gill v. Reed, 55 Mo. Ap. 246; Cowdiu v. Gottgetreu, 55 N. Y. 650; Allen v. Scarff, 1 Hilt. 209; Read v. Ladd, 1 Edm. S. C. 100; Brown v. Bradshaw, 1 Duer, 199; Lelaud v. Creyon, I McC. 100; Taylor v. Drake, 4 Strob. 431 ; Matthews v. Milton. 4 Yerg. 576 ; Mead v. Watson, 57 Vt. 426; Cutler v. Hinton, 6 Rand. 509 ; Ware v. Stephenson, 10 Leigh, 155, Accord. In Peckham v. Faria, supra, Lord Mansfield said, p. 14 : " Before the case of Jones v, Cooper I thought there was a solid distinction between an undertaking after credit given, and an original undertaking to pay, and that in the latter case the surety, being the object of the confidence, was not within the statute ; but in Jones v. Cooper the Court was of opinion, that whenever a man is to be called upon, only in the second instance, he is within the statute; otherwise, where he to be called upon in the first instance." In accordance with this distinction, the Statute of Frauds was held to be inappli- cable in the following cases where credit was given by the seller to the defendant alone, although the goods were delivered to another person. Croft v. Smallwood, 1 Esp. 121 ; Rhodes v. Leeds, 3 St. & P. 212; Faires v. Lodana, 10 Ala. 50; Sanford v. Howard, 29 Ala. 684; Clark v. Jones, 87 Ala. 474; Loomis v. Smith, 17 Conn. 115; Baldwin v. Hiers, 73 Ga. 739; Williams v. Corbet, 28 111. 262; Hughes v. Atkins, 41 HI. 213; Owen v. Stevens, 78 111. 462; Hartley v. Varner, 88 111. 561 (but setnble the rule was misapplied in this case. See also Browne, St. Fr. [5 ed.] 252) ; Johnson v. Hoover, 72 Ind. 395 ; Board v. Cincinnati Co., 128 Ind. 240; Collins v. Stanfield, 139 Ind. 184; Benbow v. Soothsmith, 76 Iowa, 151 ; Calahan v. Ward, 45 Kas. 545; Elder v. War- field, 7 Har. & J. 397 ; Walker v. Hill, 119 Mass. 249 ; Larson v. Jensen, 53 Mich. 427; Morris v. Osterhout, 55 Mich. 262 ; Hake v. Solomon, 62 Mich. 377 ; Winslow v. Da- kota Co., 32 Minn. 237 ; Amort v. Christofferson, 57 Minn. 234; Wallace v Wortham GIBBS V. BLANCHARD. [CHAF. L JOHN GIBBS and Another v. IRA BLANCHARD. In the Supreme Court, Michigan, April Term, 1867. [Reported in 15 Michigan, 292.] Christiancy, J. 1 The main question in this case is whether the promise of Gibbs (one of the defendants below) comes within the second clause of the second section of our Statute of Frauds, as a " special promise to answer for the debt, default, or misdoings " of Daily, the other defendant. The declaration contains a special count upon the contract, and the common counts for goods sold and delivered. The special count sets forth that " in consideration that said plaintiff agreed to sell to the said Daily a certain horse which the plaintiff then and there had, of the value of sixty dollars, [the defendants?] undertook and promised the said plaintiff to make sign, and deliver their promissory note to said plain- tiff or bearer in.the sum of sixty dollars for the purchase price of said horse, which said promissoiy note was to be payable thereafter, in six months from date." It further alleges that the plaintiff, relying upon said promise of said defendants, and in consideration thereof, did sell and deliver the horse to said John Daily for the price of sixty dollars. The breach alleges the failure, and refusal to make and deliver the note, as well as the refusal to pay the money. It was clear, from the evidence, that the horse was bought for the benefit of, and delivered to Daiby, and that the plaintiff would not have sold the horse on the credit of Daily alone. But upon the question whether Daily and Gibbs were to give a joint note, or whether the latter was only to indorse the note of the former, or to become his guarantor, the evidence was conflicting. There was evidence from which the jury might have found a joint promise, or in other words a promise by both to execute and deliver to the plaintiff a joint note for the price : and from the circumstances and subsequent acts of the parties the jury might have been authorized to find that the note was to be made payable in six months ; though they might also have found that no particular time was mentioned or ex- pressly agreed upon for which the note was to run. The evidence tending to show that the promise was joint, or that a joint note was to be given, was substantially this : Gibbs and Daily 25 Miss. 119; Waters v. Shafer, 25 Neb. 225 ; Barras v. Pomeroy Co., 38 Neb. 311 ; Nesbit v. Pioche Works (Nevada, 1894), 38 Pac. R. 670 ; Walker v. Richards, 41 N. H. 388 ; Chase v. Da}', 17 Johns. 114 ; Bayles v. Wallace, 56 Hun, 428 ; Maddock v. Root, 72 Hun, 98; Post v. Geoghegan, 5 Daly, 216; Fitzgerald v. Tiffany, 9 N. Y. M. R 408 ; Mackey v. Smith, 21 Oreg. 598 ; Jefferson Co. v. Slagle, 66 Pa. 202 ; Merriman v McManus, 102 Pa. 102; Mease v. Wagner, 1 McC. 395; Hazen v. Beard, 4 Sneed, 48; Sinclair v. Richardson, 12 Vt. 33; Whitman v. Bryant, 49 Vt. 512; Champion v Doty, 31 Wis. 190 ; West v. O'Hara, 55 Wis. 645 ; Treat Co. v. Warner, 60 Wis. 183.— E» 1 Only the opinion of the Court in regard to the Statute of Frauds is given. — Ed- SECT. I.] GIBBS V. BLANCHARD. 5 called upon the plaintiff together, and Gibbs asked plaintiff if he wanted to sell his mare. Plaintiff said he did. Gibbs inquired the price, and being told sixty dollars, wanted to know if plaintiff would take Daily's note if he, Gibbs, would sign it and see it paid ; to this plaintiff assented. The mare not being present, and Gibbs, being anxious to get home, said, Daily might go with plaintiff and see the mare, and if the mare suited him he might fetch her back with him and draw up a note and Daily might sign it, and the first time he, Gibbs, went to town he would sign it. The mare was delivered to Daily, who signed a note for it at six months, which was afterwards indorsed by Gibbs on Sunday. This note was produced on the trial and tendered back to defendants. The Court charged the jury that " if it was the understanding of the parties that Daily was the purchaser, and that he should give his note to the plaintiff for the price, and that Gibbs should so sign as only to be liable as indorser, the plaintiff must fail. If, however, the under- standing of the parties was at the time, that Gibbs and Daily were the buyers of the mare, and that both were to be liable as purchasers for the purchase price, and, accordingly, should become joint makers of a promissory note for its payment, though Daily was less relied upon by the plaintiff than Gibbs, and though, in point of fact, it was under- stood that the mare, when bought, should belong to Daily, the plaintiff is entitled to recover. That the principle in this class of cases is, tha* if the agreement be such that two persons, in the purchase of goods, do at the same time become co-debtors to the seller for the price, then both are purchasers, and the case is not within the Statute of Frauds, and no memorandum in writing is necessary. But if it be such that one, at the time, becomes debtor to the seller, and the other security onby for the debt, it is within the Statute of Frauds, and the undertak- ing of the security is void unless a memorandum of it in writing is made." Though the question is one requiring some accuracy of discrimina* tion, I have come to the conclusion, after a careful examination of the authorities, that the charge of the Court was not only correct, but that it expresses the true rule of law applicable to the question with re- markable clearness. No question can arise as to the sufficiency of the consideration for the undertaking of Gibbs, whether original or collateral, within or without the statute. Without his promise, the plaintiff would not have parted with his property. The consideration, therefore, is equally as good in law as a sale of the horse to him alone would have been for his sole promise to pay the price. The plain, ordinary meaning of the language used in this clause of the statute would seem sufficiently to indicate that the class of special promises required to be in writing includes only such as are secondaiy or collateral to, or in aid of the undertaking or liability of some other party whose obligation, as between the promisor and promisee, is origi- 6 GIBBS V. BLANCHARD. [CHAP. L nal or primary. If there be no such original or primary undertaking or liability of another part}*, there is 'nothing to which the promise in question can be secondary or collateral, and the promise is, therefore, original in its nature, and not within the statute. In other words, the statute applies onby to promises which are in the nature of guarantees for some original or primary obligations to be performed by another. This has been settled b}" a remarkably uniform course of decision since the passage of the statute, — 29 Car. 2, c. 3, § 4, — which does not essentially differ from our own and those of most of the States of the Union. So numerous and so uniform have been the decisions upon this point, that it would savor of affectation to cite them. They will be found cited in most of the elementary treatises. See Brown on Stat. Frauds, c. 10; Chitty on Cont. p. 442 et seq. ; 2 Pars, on Cont. 4th ed. 301. And though the terms original and collateral have been criticised, }'et when used, the one to mark the obligation of the princi- pal debtor, the other that of the person who undertakes to answer for such debt, they are strictly correct, and give the true view of this clause of the statute. Mallory v. Gillett ; Brown on Stat. Frauds, c. 10, § 192. As a result of this principle, that one must be held originally or primarily, and the other only collaterally, or in default of the former, it follows that the statute only applies to such promises made in be- half or for the benefit of another, as would, if valid, create a distinct and several liability" of the party thus promising, and not a joint lia- bility with the party in whose behalf it is made. For if one be bound in the first instance and at all events, and the other only contingently, or on default of the first, the liability could not be joint. On the other hand, if the promise or the obligation of the two be joint, as between them, on the one side and the promisee on the other, then neither is collateral to the other ; and such joint promise is original as to both. Hence it has been held in England that an agreement to convert a separate into a joint debt is not within the statute ; the effect being to create a new debt, in consideration of the former being extinguished. Ex parte Lane ; a Brown on Stat, of Frauds, 193. Where the question arises (as it has in almost all the cases), as one of the several liability of the party promising in behalf of another (as for the price of goods sold to another), the true rule undoubtedly is, that if the latter (to whom the goods are sold) be liable at all, then the promise of the former is collateral, and must be in writing ; because, from the very nature of such a case, the party to whom the goods are sold, and in whose behalf the promise is made, is the principal debtor ; and because it would be manifestly unreasonable to hold that both were in such cases severally liable as principals, as upon several original undertakings at the same moment. See Hetfield et al. v. Dow ; 2 Dixon v. Frazee. 8 And this rule applies equally when the promise is made in reference to a pre-existing liability of another, if the plaintiff in accepting 1 1 De Gex, 300. 2 3 Butcher, 440. 3 I E. D. Smith, 32. SECT. I.] GIBBS V. BLANCHARD. 7 the promise does not release the principal. In reference to all such cases the authorities may be said to be entirely uniform. But the rule thus established as to cases where the question is one of the several liability of the party making the special promise, can, I think, have no application to the question of a joint liability upon a joint prom- ise of the two. The only intimation to the contrary which I have seen is to be found in a dictum of Judge Catron in Matthews v. Milton. 1 a case in which no such question was involved, there being no evidence tending to show a joint promise. To say that when the party originally owing the debt, or for whom goods are purchased and to whom they are delivered, is liable at all, no other person can be held severally liable unless the promise be in writing, is merely saying that such promise is collateral, and therefore within the statute. But to say that the}- cannot both become jointly liable upon their joint promise, not in writing, to pa}' such debt or the price of such goods, if the party originally owing the debt or receiving the goods be at all liable, is but another form of declaring that it is not competent for both to become original promisors, as between them and the promisee, unless both are under an equal obligation, as between themselves, for the ultimate pay- ment of the debt. Such a proposition, it seems to me, cannot be main tained either upon principle or authority. Such an objection to a joint promise seems rather to have reference to some supposed defect of consideration (a question entirely distinct from the statute) than to the promise. And, if the party promising jointly with another to whom goods are furnished, cannot be bound jointly with the latter, because, as between the two promisors, he, not having received the goods, is under no obligation to pay ; then the same reason ought to operate with still greater force against his several promise to pa}* the whole price of goods received by the other. But the law in the latter case is well settled the other way. It was very correctly remarked by Whelply, J., in Hetfield et al. v. Dow, above cited, that, " to settle the rights of promisors inter sese, to ascertain as between them who is to pay the debt ultimately, is no part of the object of the act. It by no means follows that he who by the arrangement between the promisors ultimately may be bound to pay the debt is, as to the promisee, the principal debtor. That does not con- cern hitn." This view, it seems to me, rests upon sound reasons, — reasons which must naturally enter into the consideration of business men, in the ordinary transactions of business. Where a party has been willing to put himself in the position of an original promisor (either jointly or severally) to a vendor for goods purchased for the benefit of, or delivered to another, the vendor has a right conclusively to presume that such relations or arrangements exist between the two as to make it the duty of the party or parties promising, as between them- selves, to pay according to the promise. And to allow the contrary to be shown to defeat the promise, would operate as a fraud upon the vendor. 1 4 Yerg. 57ft 3 GIBBS V. BLANCHARD. [CHAP. I. The question of a joint promise appears to have been seldom raised for adjudication in connection with the Statute of Frauds ; but the fol- lowing cases fully sustain the proposition that a joint promise of two, whether to pa} r the pre-existing debt of one of them, or a debt con- tracted at the time for his benefit (as for goods bought for and delivered to the one), does not come within the statute, but is an original promise, as between them and the promisee, and valid without writing. Ex parte Lane ; x Wainwright v. Straw ; 2 Stone v. Walker ; 3 and Iletfield v. Dow. 4 See also b}' analogy, Batson v. King. 5 The same doctrine is laid down by Mr. Brown in his able treatise on the Statute of Frauds. Ch. 10, § 197. It is true that in "Wainwright v. Straw, which most resembles the present case, the decision is placed in part upon the ground that the sale was made to both. The facts were that Straw and Cunningham both went to plaintiff's store and said they wished to buy a stove for Straw, but that both would be responsible. Now I can see no differ- ence in legal effect between the case where A and B sa\- to a merchant, " We want to buy a stove for B, and both of us will be responsible ; " and the case where A says, " B wishes to purchase a stove, but we will both be responsible." Substantially, the transaction is the same; in both cases alike it is a sale for the benefit of the one on the joint credit of the two, and the real question in both cases is, whether the credit was given to both jointly. I do not think the Court, in Wainwright v. Straw, based their decision upon the narrow and merely verbal ground of the use of the first person plural, showing merely who wanted the stove, but upon the broad ground above stated, that it was sold upon their joint credit. And in all such cases where the sale is upon the joint credit and promise of the defendants, though the prop- erty is purchased for, and delivered to but one of them, I think the legal effect of the transaction constitutes, as between them and the vendor, a sale to the two jointly. The sale as between the vendor and the vendee, is to the party or parties to whom the credit is given for the price, without reference to the question for whose use it is pur- chased, or who, as between the promisors, is to be its owner when bought. 6 This brings us to another point in the case. The sale (if upon the joint credit and promise of the defendants) was a joint sale to both, as between them and the plaintiff. But in the special count of the decla- ration it is alleged as a sale to Daily alone. The plaintiff cannot therefore recover upon the special count. But upon the count for goods sold and delivered, the sale having 1 1 De Gex, 300. 2 15 Vt. 215. 3 13 Gray. 613. 4 3 Dutcher, 440. 5 4 H. & N. 739. 6 Boyce v. Murphy, 91 Ind. 1 ; Swift v. Pierce, 13 All. 136 (semble) ; Rothman v. Fix, 25 Mo. Ap. 571 (semble) ; Hetfield v. Dow, 27 N. J. 440 (semb/e) ; Wainwright v. Straw, 15 Vt. 215 ; Eddy v. Davidson, 42 Vt. 56 (semb/e), Accord. See Boykins v. Dohlonde, Ala. Sel. Gas. 502, 507-8 ; Matthews v. Milton, 4 Yerg. 576. — Ed. SECT. T.] HART V. LONGFIELD. 9 been made to both, the plaintiff would be entitled to recover, if the facts be such as would warrant a recovery upon a sale made for the joint benefit of, and the property delivered to both. I think there was no error in the charge or proceedings of the Court below, and that the judgment should be affirmed, with costs. Cooley, J., and Campbell, J., 1 concurred. HART v. LONGFIELD. In the Queen's Bench, Hilary Term, 1703. {Reported in 7 Modern Reports, 148.] Indebitatus Assumpsit. One of the counts, to which there was a demurrer, was this : The plaintiff declared that whereas such a da}- and year the defendant was indebted to him in such a sum for nourishing Edward Longfield, at the request and instance of the defendant, and that he, the defendant, promised to pay him. The first exception was, That an indebitatus assumpsit did not lie in the case ; and to prove this the case of Sands v. Trevilian 2 was cited, where A desired B to be attorney for J. S. and undertook to pay him his fees, and such fees as he should give to counsel ; and it was adjudged, that an indebitatus would not lie against A. 8 And also the cases of Hinson v. Burridge, 4 and Rozer v. Rozer. 1 The opinion of Campbell, J., is omitted. a Cro. Car. 107, 194. — But see Ambrose v. Rowe, 2 Show. 421. 3 The plaintiff had obtained judgment in the Common Pleas, but on a writ of error to the King's Bench, " All the Court conceived that no action of debt lies here, but an action upon the case only ; for the retainer being for another man, and he being at- torney for another man who agreed to that retainer, there is no cause of debt betwixt him who retained and the attorney, and no contract nor consideration to ground this action : and he who is so retained may well have debt for his fees wherein there cannot be any wager of law ; but against the defendant, who is a stranger to the suit, and at whose request he took upon him to be attorney, debt lies not, as 27 Hen. VIII., pi. 24 : and in the case of Rolls v. Germyn, Cro. El. 425, Moo. 366, it was so resolved. Where- upon it was adjudged that the first judgment should be reversed." But in Harris v. Finch, Al. 6, Rolle, C. J., who had been of counsel for the plain- tiff in Sands v. Trevilian, is reported as saying of that case that "the judgment was not reversed upon the roll, and his opinion was that the judgment was good." In Am- brose v. Rowe, 2 Show. 421, Skin. 47, s. c, Lord Jeffries, C. J., said, " that he thought Rolle's argument in that case of Sands v. Trevilian not to be answered." Rolle had argued that " there was a difference where one is retained generally for another with such a promise to pay his fees and as much as he should expend in the suit, there debt lies : but if I retain one to be attorney for another and promise if the other doth not pay, that I will pay, there if the party for whom the retainer is doth not pay, an action of the case lies against me upon my promise, and not an action of debt." In confirm- ation of this sound distinction see Woodhouse v. Bradford, 2 Roll. R. 76, Cro. Jac. 520 ; Sanborn v. Merrill, 41 Me. 467 ; Hodges v. Hall, 29 Vt. 209 : Murphy v. Gates SI Wis. 370. — Ed. 4 Moor, 701. 10 SHANDOIS V. SIMSON. [CHAP. I. Holt, C. J. Cannot A be indebted to B for doing good to C? For if A should say to B, "Give such a quantity of goods to C upon my account, and I will pay you ;" or, " Make J. S. a cart, and I will pay you for it ; " surely an indebitatus will lie against A in that case. The sale properly is to him upon whose request it is given, and not to him to whom it is given : but an indebitatus will not lie for being an attorney to a third person, because in that case his being an attorney on record is what entitles him to debt ; and therefore, if another promise to pa}-, yet he for whom he is an attorney on record is not discharged, and therefore the other cannot in that case be liable to an indebitatus. And in the case of the cloth put before, no action lies against him to whom it is delivered, but only against him upon whose request it is sold. Judgment for plaintiff 1 THE LADY SHANDOIS v. SIMSON. In the Queen's Bench, Trinity Term, 1601. [Reported in 1 Croke, Elizabeth, 880.] Error of a judgment in the Common Pleas, where the plaintiff de- clared in debt for £256 upon several retainers to embroider divers gowns. Secondly. 2 It was alleged that debt lies not in this case, but an assumpsit only ; for here is not any contract betwixt them, nor quid pro quo : and therefore Nelson's Case, 28 Eliz., was cited, that where one retained Nelson to be attorne}' for another in such a suit, and agreed that he should have so much for his labor, he brought debt against him who retained him, and not against him for whom he was retained : and it was adjudged that it lay not, for it is not any contract between them ; but an assumpsit lies only because he became at his request the other man's attorne}'. Sed non allocatur: for here the embroidering of the gown at her request is sufficient, and it is at his election to have debt or assumpsit ; 3 as 37 Hen. 6, pi. 8 ; 3 Edw. 4, pi. 21 ; 7 Edw. 4, pi. 26 ; Dyer, 347 and 337 ; Wooton's Case. 1 Bret v. J. S., Cro. El. 756 ; Stonehouse v. Bodvil, T. Ray. 67, 1 Keb. 439, s. c. ; Jordan v. Tompkins, 2 Ld. Ray. 982 ; 6 Mod. 77, s. c. ; Brown v. Harrell, 40 Ark. 429 ; McTighe v. Herman, 42 Ark. 285 ; Chicago Co. v. Liddell, 69 111. 639 ; Geelan v. Reid, 22 111. Ap. 165; Kernodle v. Caldwell, 46 Ind. 153; Lessenich v. Pettit (Iowa, 1894), 60 N. W. R. 192; Grant v. Wolf, 34 Minn. 32; Sinclair v. Bradley, 52 Mo. 180; Bushee v. Allen, 31 Vt. 631, Accord. _ In Rawson v. Springsteen, 2 Th. & C. 416, A was not liable on his oral promise to pay for B's board, because credit was given to B also. — Ed. 2 Only so much of the case is given as relates to the second error. — Ed. 3 Y. B. 37 H. VI. 9-18 ; Harris v. Finch, Al. 6 ; Gordon v. Martin, Fitzg., 302, Accord. In the casf last cited, Lee, C. J., said : " There is a difference between a conditional SECT. I.J BUTCHER V. ANDREWS. 11 WATKINS v. PERKINS. At Nisi Prius, Coram Lord Holt, C. J., Easter Term, 1697. [Reported in 1 Lord Raymond, 224.] Per Holt, C. J. If A promise B, being a surgeon, that if B cure D of a wound, he will see him paid ; this is only a promise to pay if D does not, and therefore it ought to be in writing by the Statute of Frauds. 1 But if A promise, in such case, that he will be B's paymas- ter, whatever he shall deserve, it is immediately the debt of A, and he is liable without writing. 2 BUTCHER v. ANDREWS. In the King's Bench, Easter Term, 1698. [Reported in Comberbach, 473. 3 ] Assumpsit. The plaintiff declares that the defendant, in consider- ation the plaintiff would lend his son £10, promised to pay it. Upon non assumpsit pleaded, and Verdict pro quer' , it was moved in arrest of judgment, that the promise of the father wanted a sufficient considera- tion ; and this difference was taken b} r Holt, C. J., where the promise of the father is in consideration, that the plaintiff would lend money, etc., and where it is in consideration that he would pay money to his son. In the former case an indebitatus assumpsit lies not against the father, for it is a collateral promise, and ought to be in writing, accord- and an absolute undertaking ; as if A promise to pay B such a sura if C does not, there A is hut a security for C. But if A promise that C will pay such a sum, A is the principal debtor ; for the act done was on his credit, and no way upon C's." — Ed. 1 The promise being collateral, the Statute of Frauds applied in the following cases : Puckett v. Bates, 4 Ala. 390 ; Walker v. Irwin (Iowa, 1895), 62 N. W. R. 785 ; Birchell v. Neaster, 36 Oh. St. 331 ; Bi.xby v. Church (Oregon. 1895), 42 Pac. R. 613; Lewis v. Albert Co., 156 Pa. 217 ; Skinner v. Conant, 2 Vt. 453; Steele v. Towne, 28 Vt. 771. — Ed. - Credit being given exclusively to the defendant for services rendered to another, the Statute of Frauds did not apply in Darnell v. Tratt, 2 C. & P. 82 ; Milliken v. Warner, 62 Conn. 51 ; Crowder v. Keys, 91 Ga. 180 ; Brandner v. Krebbs, 54 111. Ap. 652 ; Peyson v. Conniff, 32 Xeb. 269* ; Hazletone v. Wilson, 55 N. J. 250 ; Snell v. Rogers, 70 Hun, 462 ; Barrett v. Johnson, 77 Hun, 527; Boston v. Farr, 148 Pa. 220. Walker v. Norton, 29 Vt. 226 ; Eddy v. Davidson, 42 Vt. 56 ; Weisel v. Spence, 59 Wis. 301 ; Murphy v. Gates, 81 Wis. 370. -- Ed. 3 Salk. 23; Carth. 446, s. c — Ed. 12 BUCKMYK V. DARNALL. [CHAP. L ing to the Statute of Frauds ; l but in the other case, payment to the son upon the request of the father is in law a payment to the father, who is the only debtor, and therefore shall be liable to the action. 2 BUCKMYR v. DARNALL. In the Queen's Bench, Michaelmas Term, 1704. [Reported in 2 Lord Raymond, 1085. 3 ] An action upon the case wherein the plaintiff declared that the defend- ant, in consideration the plaintiff, at his request locaret et deliberaret cui- . Drake, 4 Strob. 431 ; or as maker. Dee v. Downs, 57 Iowa, 589; Wilson v. Roberts, 5 Bosw. 100; or as acceptor, Chap- line v. Atkinson, 45 Ark. 67; Williams v. Caldwell, 4 S. Ca. n. s. 100. The rule is the same as to a promise to sign a bond as surety for a third person. Hayes o. Burkam, 51 Ind. 130. — Ed. 2 Dougherty v. Bash, 167 Pa. 429, Accord. —Ed. 6C HARGREAVES V. PARSONS. [CHAP. I HARGREAVES v. PARSONS. In the Exchequer, Michaelmas Term, 1844. [Reported in 13 Meeson Sf Welsby, 561.] The judgment of the Court was, on the 10th of December, deliv- ered by Parke, B. 1 This was an action b} T the plaintiff against the defend- ant upon two contracts made by him with the plaintiff, on the assign- ment of two other contracts between the defendant and Parker, for taking from or delivering to the defendant, at his option, certain shares in a foreign railwa}', at a fixed premium, on or before the 18th Febru- ary, 1844 ; and the defendant agreed to guarantee the delivery by Parker to the plaintiff. Three objections were made by 3fr. Watson, at the close of the plaintiff's case, and reserved by the learned judge. The first and most important was, that a note in writing was necessary under the Statute of Frauds, because the agreement or guaranty by the defendant, for the performance b}' Parker of the new agreement, was a promise to answer for the debt or default of Parker. The learned judge inti- mated his opinion, that this was not a case within the statute, but was an original promise. And we are of the same opinion. The statute applies only to prom- ises made to the persons to whom another is already, or is to become, answerable. It must be a promise to be answerable for a debt of, or a default in some duty by, that other person towards the promisee. This was decided, and no doubt rightly, by the Court of Queen's Bench, in Eastwood y. Kenyon, and in Thomas v. Cook. In this case Parker had not contracted with the plaintiff, nor was it intended that he should ; there was no privity between them ; the non-performance of Parker's contract with the defendant would be no default towards the plaintiff, and, consequently, the undertaking by the defendant was no promise to answer for the default or miscarriage of Parker in any debt or duty towards the plaintiff. It was an original promise that a certain thing should be done by a third person. There must, therefore, be no rule. Mule refused. 1 Only the opinion of the Court is given, and that, too, slightly abridged. — Ed. SECT. I.] CAKDELL V. McNIEL. 61 CARDELL v. McNIEL. In tfie Court of Appeals, New York, March, 1860. [Reported in 21 New York Reports, 336.] Comstock, Ch. J. 1 The contract for the sale of the plaintiff's horse to the defendant, was concluded on the part of the latter by his agent, Acker. By the terms of the contract, as testified to b}- the plaintiff's witness, Greenfield, and as found by the referee, the horse was to be paid for in a span of horses owned by the defendant, which were to be delivered to the plaintiff ; by a note of $110, to be signed by the defendant and one Ingham ; by a note of $40, given by one Burk ; and by a note of $125, given by one Cornell, payable in a buggy, on the 29th of June, 1854. The defendant, through his agent, warranted Cornell to be "good," and that the plaintiff would get the buggy when the note be- came due. On these terms the sale was completed, and the plaintiff delivered his horse. The notes were to be sent to the plaintiff on the following day, and they were sent accordingly. There was no written guaranty of the note of Cornell, which turned out to be worthless. The action is founded on the verbal undertaking. We think that the guaranty was, in effect, one of payment, according to the terms of the note, and not for the collection of the demand by process of law. The evidence and the finding are, that the defendant's agent said that the maker was good, and that he would warrant that the plaintiff would get the buggy when the note fell due. The obvious meaning of this is that the obligation would be paid at maturity, and according to its terms. The contract was, therefore, broken, and the defendant became liable to suit upon it, when Cornell failed to pay, after payment was due. It is claimed that the guaranty is void by the Statute of Frauds. In mere form it was certainly a collateral undertaking, because it was a promise that another person should perform his obligation. But, look- ing at the substance of the transaction, we see that the defendant paid, in this manner, a part of the price of a horse sold to himself. In a sense merely formal, he agreed to answer for the debt of Cornell. In reality he undertook to pay his own vendor so much of the price of the chattel, unless a third person should make the payment for him, and thereby discharge him. The question at this time hardly claims a discussion, because it was, in effect, decided by this Court upon the fullest consideration, in Brown v. Curtiss. There the holder of a note transferred it in payment of his own debt, indorsing upon it a guarant}' of the payment which expressed no consideration ; and on that ground the undertaking was claimed to be void. It was conceded to be 1 Everything is omitted except the opinion of the Court relating to the Statute of Frauds. — Ed. 62 BROWN V. CURTISS. [CHAP. L void, provided the statute applied to such a case. It was, however, held to be a valid promise, on the ground that the statute did not apply. kt In such cases," it was observed, " where the party undertakes, for his own benefit, upon a full consideration received by himself, the promise is not within the statute." It is impossible to distinguish, in principle, between that case and the present : certainly no distinction can be drawn favorable to the defendant. Johnson v. Gilbert ; x Nelson v. Boynton. 2 All the judges concurring, Judgment affirmed.* BROWN, Plaintiff in Error, v. CURTISS, Defendant in Error. In the Court of Appeals, New York, May, 1849. [Reported in 2 New York Reports, 225.] On error from the Supreme Court, where the action was assumpsit upon a guaranty, brought lw Curtiss against Chester Brown, tried at the Columbia Circuit, before Edmonds, Circuit Judge, in September, 1845. On the trial the plaintiff gave in evidence a promissory note as follows : — " For value received I promise to pay Chester Brown or bearer fifty- dollars, six months from date, with use. "G. F. Brown. " Canaan, April 2, 1838." The plaintiff also proved that the defendant transferred the note to him in exchange for another note which he held against the defendant for borrowed money. When the transfer was made, the plaintiff said to the defendant: " I know nothing of the maker's circumstances, but if you will guarantee the note I will take it." The defendant thereupon executed the following guaranty on the back of the note : "I guaranty the payment of the within. Chester Brown." The evidence as to the consideration of the transfer and guaranty was objected to by the defendant, and the objection overruled. The defendant excepted. It 1 4 Hill, 178. 2 3 Mete. 400. 3 Beaty v. Grim, 18 Ind. 131 (but see Hassinger v. Newman, 83 Ind. 124) ; Little v. Edwards, 69 Md. 499; Wilson v. Hentges, 29 Minn. 102; Johnson v. Gilbert, 4 Hill, 178; Newell v. Chapman, 74 Hun, 111; Malone v. Keener, 44 Pa. 107; Hopkins v. Richardson, 9 Grat. 485, Accord. See to the same effect the following cases in which negotiable notes payable to the order of A were assigned by A without indorsement, but with a guaranty of payment : Mobile Co. v. Jones, 57 Ga. 198; Smith v. Finch. 3 111. 321 ; Adcock v. Fleming, 2 Dev. & B. 225; Ashford v. Robinson, 8 Trod. 114 ; Rowland v Rorke, 4 Jones (N. C), 337; Hall v. Rodgers, 7 Hum. 536 ; Wyman v. Goodrich, 26 Wis. 21. — Ed. SECT. I.] BROWN V. CURTISS. 63 was admitted that there had been no demand of the maker, nor any notice of non-payment. The defendant offered to prove that from the time the note fell due until the latter part of the year 1843 the maker was able to pay the note ; that he then failed, and was insolvent at the commencement of the suit, and still remained so. This evidence was objected to by the plaintiff and excluded. The defendant excepted. 1 The evidence being- closed, it was insisted on the part of the defend- ant that the plaintiff could not recover, on the grounds : 1. That there was no proof of demand and notice ; 2. That the guaranty was void by the Statute of Frauds, there being no consideration expressed therein. The circuit judge directed the jury to find for the plaintiff, and the defendant excepted. The Supreme Court sitting in the Third District refused a new trial, and, after judgment for the plaintiff, the defendant brought error to this court. K. Miller, for plaintiff in error. C. L. Monell, for defendant in error. Buoxson, J. The only remaining question is on the Statute of Frauds. 2 R. S. 135, § 2. If the case is within the statute, it is im- possible to get over the objection that no consideration is expressed in the guarant}-. I know it was held in Manrow v. Durham a that a guaranty like this was a promissory note, which imports a considera- tion, and was therefore valid. But that case, which has been ques- tioned elsewhere (Story, Prom. Notes, 5'J7) as well as at home, cannot be law. An undertaking that another man will perform his contract is not a promissory note. It is not within any definition which was ever given of a promissory note, and it cannot be held to be such without confounding all legal distinctions in relation to the nature of contracts. But I think the Statute of Frauds does not apply to this case. Al- though in form this is a promise to answer for the debt or default of another, in substance it is an engagement to pay the guarantor's own debt in a particular way. He does not undertake as a mere surety for the maker, but on his own account, and for a consideration which has its root in a transaction entirely distinct from the liability of the maker. The defendant was a debtor to the plaintiff, and gave the note, with the guaranty, to satisfy that debt. This belongs to the third class of cases mentioned by Kent, C. J., in Leonard v. Vredenburgh. £ There was a new and distinct consideration, independent of the debt of the maker, and one moving between the parties to the new promise. In such cases, where the party undertakes for his own benefit, and upon a full consideration received by himself, the promise is not within the statute. It would be good without any writing. The point was decided by the Supreme Court in Johnson v. Gilbert, 4 and I do not think it necessary to refer to other cases holding the same doctrine. c> 1 The opinion of the Court overruling this exception is omitted, together with the toncurring opinion of Strong, J., iu regard to the Statute of Frauds. — Ed. » 3 Hill, 584. 3 8 John. 3S. 39. * 4 Hill, 178. 64 DOWS V. SWETT. [CHAP. I. Jewett, C. J., and Gardiner, J., were of opinion that the guaranty was within the Statute of Frauds, and therefore void. Judgment affirmed} DOWS and Another v. SWETT. In the Supreme Judicial Court, Massachusetts, January 10, 1883. [Reported in 134 Massachusetts Reports, 140.] C. Ai.len, J. This case, unfortunately, must be sent back for another trial, and it becomes desirable to state more fully the prin- ciples on which its determination must depend. The declaration alleges, in substance, that the defendant was indebted to the plaintiffs in the sum of $200 for the balance due on a due-bill given to them for goods sold and delivered by them to him, and that he asked them to take in exchange for the sum due on said due-bill a promissory note for the same sum which he had caused to be made, and which was signed b}- one Robinson, and made payable to the order of the plaintiffs ; and, to induce the plaintiffs to make said exchange, the defendant agreed that, if said note should not be paid by Robinson at its maturity, he, the defendant, would pay it himself; that upon this verbal guaranty the plaintiffs received the note, and gave therefor the due-bill ; that the note was not paid by Robinson, and that the defend- ant refuses to fulfil his said agreement. There was evidence at the trial tending to show that in 1874 the plaintiffs brought an action against the defendant upon their account for goods sold and delivered, and that at the trial of said action in 1874 it appeared that the bill for the goods was settled by check and by the said due-bill, and that the due-bill also was paid by cash, merchandise, and said Robinson's note ; whereupon a verdict was taken for the defendant, upon which judg- ment was rendered. The difficulty in the case seems largely to depend upon the unusual state of facts ; there having been an action brought by the plaintiffs against the defendant upon his original indebtedness to them, in which action a judgment was rendered for the defendant. 1 Mobile Co. v. Jones, 57 G-a. 198; Darst v. Bates, 95 111. 493; Jones v. Palmer, 1 Doug. (Mich.) 379 ; Thomas v. Dodge, 8 Mich. 51 , Sheldon v. Butler, 24 Minn. 513 ; Crane v. Wheeler, 48 Minn. 207 ; Barker v. Scudder, 56 Mo. 272 ; Bruce v. Burr, 67 N. Y. 237 ; Milks v. "Rich, 80 N. Y. 269 ; Fowler v. Clearwater, 35 Barb. 143 ; Daubner v. Blackney, 38 Barb. 432; Lossee v. Williams, 6 Lans. 228: Allen r. Eighmie, 14 Hun, 559; Hall v. Rogers, 7 Hum. 536; Wyman v. Goodrich, 26 Wis. 21 , Eagle Co. v. Shattuck, 53 Wis. 455, Accord. Wood v. Wheelock, 25 Barb. 625, Contra. In Milks v. "Rich, supra, Earl, J., said (p. 271) : "The reasoning to take this promise out of the statute is quite subtle, and 1 should have much difficulty in yielding it my assent but for the authorities which I think ought now to control." See also Hassinger v. Newman, 83 Ind. 124. — Ed. SECT. I.] DOWS V. SWETT. 65 Where a note of a third party is taken by a creditor from his debtor, for or on account of a pre-existing debt, or on a consideration then first accruing, it may be received either in absolute payment, conditional *pa\ inent, or as collateral security. And in every case it may be shown by evidence what was the actual transaction, and on what terms the note was received. Butts v. Dean ; 1 Parham Sewing Machine Co. v. Brock. 2 Where such note is taken in absolute payment of a pre-exist- ing debt, or of a liability for money lent, service rendered, or other consideration accruing at the time of taking it, the effect, of course, is to extinguish the liability of the person who transfers the note, and to substitute therefor the liability of the parties to the note, as the sole subsisting obligation. But where the note is taken as collateral security, or in conditional payment, the right of action against him who makes the transfer is not defeated altogether, but is, at most, only suspended during the time the note has to run, and revives again upon the non-payment of the note at its maturit}'. The original indebtedness in such case is not discharged, unless the note is paid. The Kimball ; 8 Byles on Bills, 6th Am. ed. 236, 380, 385 ; 2 Am. Lead. Cas. 4th ed., 250, 251, and cases cited ; Belshaw v. Bush ; 4 Valpy v. Oakeley ; 5 Miles v. Gorton. 6 In the latter class of cases, the transaction is as if the debtor said : " I owe you a debt. Take this note and collect it if you can. If you get the money on it, that will pay you. If you do not, I will myself pay you what I owe." In all such cases the defendant's promise is in effect to pay his own debt, and it is not necessary that such promise should be in writing, though incidentally the debt of a third person is guaranteed. And man}' of the decisions of courts, which at first sight may appear to hold that an oral guarant}' of the note of another, which is transferred on account of a debt due from the guarantor, is not within the Statute of Frauds, will on a care- ful examination be found not to rest on the principle above stated, and not to be neeessarilv inconsistent with our own conclusion in the pres- ent case. For example, in Milks v. Rich, 7 Earl, J., after stating that " the reasoning to take this promise out of the statute is quite subtle, and I should have much difficulty in yielding it my assent, but for the authorities which I think ought now to control," goes on to say : " The defendant's promise may be regarded, in effect, not as a collateral promise to answer for the default of Marsh, but as a promise to pay the plaintiff for the money he had had, in case Marsh did not pa}- him. like the promise of one to pay his own debt, in case a third person did not pay it." In Bruce v. Burr, 8 the decision rests on the same distinc- tion ; and both cases refer, for authority, to Cardell v. McNiel, where Comstock, C. J., in delivering the opinion of the Court, said: "In 1 2 Met. 76. - 113 Mass. 194. 3 3 Wall. 37. 4 11 C. B. 191, 206 5 16 Q. B. 941 . 6 2 Cr. & M. 504 512 1 80 N. Y. 269, 271. 8 67 N. Y. 237- 66 DOWS V. SWETT. [CHAP. I. mere form it was certainly a collateral undertaking. . . . But, looking at the substance of the transaction, we see that the defendant paid, in this manner, a part of the price of a horse sold to himself. In a sense merely formal, he agreed to answer for the debt of Cornell. In reality he undertook to pay his own vendor so much of the price of the chattel, unless a third person should make the payment for him, and thereby discharge him." In all these cases it will be observed that the Court carefully put the decision on the express ground that the original debtor is not discharged, and his debt is not extinguished, until the note is actually paid. 80 in Pennsylvania, in Taylor v. Preston, 1 Mr. Justice Woodward, a high authority, says, the statute does not require the promise to be in writing " where it is in effect to pa}' the promisor's own debt, though that of a third person be incidentally guaranteed ; it applies to the mere promise to become responsible, but not to actual obligations" — i. e. of the promisor. " Buying the land, the promise to pay for it, whatever the form, was a promise to pay their own debt." It " was not only a stipulation to pay a debt which Preston owed, but a stipulation to paj T the price of property the\" had bought." To the same effect are Townsend v. Long.' 2 and Malone v. Keener. 3 The above suggestions will not reconcile all the cases, but in our opinion they are sufficient to show the just grounds on which the appli- cation of the clause of the Statute of Frauds now under consideration depends. When the present case was first before this court, 4 the decision was put expressly on the ground that the defendant's previous liability had been settled and discharged, so that the only existing direct liability was that of Robinson upon his note ; and under this state of things the defendant's oral promise to pay the note, if Robin- son did not, could not be treated as a promise to pay a subsisting debt of the defendant, but onl} T as a collateral promise to pay Robinson's debt, and as such was within the Statute of Frauds. Upon further consideration, we adhere to that decision as a correct exposition of the law. When the case came a second time before this court, 5 the point determined was that the plaintiffs were not precluded by what had hap- pened before from relying on the second and third counts ; and for this reason a new trial was properly granted. An additional statement in the opinion may have led to the inference that, in the view of the Court, if the leading and chief object of the defendant's promise was in effect to pay his own debt, it should be considered in substance that the defendant guaranteed his own debt, and that therefore his promise to pay Robinson's note, if Robinson should not, was not within the Statute of Frauds ; and the learned judge of the Superior Court, upon the new trial, so ruled. But we think this ruling cannot be supported, as appli- cable to the case, as it comes before us. If Robinson's note was not taken in absolute payment, and if the due-bill was still an existing lia- bility, then the defendant's promise might perhaps be found, as matter of 1 79"Tenn. St. 436, 441. - 77 Penn. St. 143. 3 44 Penn St. 107. * 120 Mass. 322. 5 127 Mass. 364. SECT. I.] WOLFF V KOPPEL. 67 fact, to have been intended and accepted as a promise to pay the due- bill. But if the note was taken in absolute payment, then the liability of the defendant was of course extinguished, and it follows that the only remaining direct liability was that of Robinson ion his note, and the promise of the defendant could be treated only as collateral. The declaration is on a promise to guarantee Robinson's note, and it is not a case for saying that the declaration is inartificial, and that in sub- stance and effect it sets out a promise by the defendant to pay his own debt; because, in the first place, the declaration appears to have been very carefully drawn, and, in the second place, the evidence tended to show that the plaintiffs in their former action sought to recover on their own debt, and failed. It does not distinctly appear whether there was then a count upon the due-bill, as representing a cause of action distinct from that for goods sold and delivered. But in the present action the third count was upon the due-bill, and it has been stricken out, upon the order of the judge that the plaintiffs should elect upon which count they would proceed to trial. The due-bill is out of the case. Only the first count remains. The question, therefore, is now distinctly presented, whether the defendant can be held liable on an oral promise to guarantee the note of a third person, transferred by him to his creditor, when that promise cannot by any construction be enforced as in reality a recogni- tion of, or a promise to pay, his own pre-existing debt. To hold him liable under such circumstances, would be to hold him to a greater liability than if he had put his name upon the back of the note, and would be inconsistent with the Gen. Sts. c. 105, § 1. .Exceptions sustained. 1 J. B. Richardson, for the defendant. D. B. Gove, for 'the plaintiffs. WOLFF AND HENRI CKS v. KOPPEL. In the Supreme Court, New York, July, 1843. [Reported in 5 Hill, 458.] Error to the New York C. P., where Koppel sued Wolff & Henricks to recover the price of certain goods alleged to have been sold by the latter as factors acting under a del credere commission. The agree- ment del credt n was by parol ; and one point made in the court below was, that the defendant's engagement, not being in writing, was void by the Statute of Frauds. The Court held otherwise ; and, after judg- ment in favor of the plaintiff, the defendants sued out a writ of error. J. T. Brady, for the plaintiffs in error. E. C. Benedict, for the defendant in error. 1 Sheldon v. Butler, 24 Minn. 513; Crane v. Wheeler, 48 Minn. 207; Eagle Co. v Shattuck. 53 Wis. 455. Contra. — Ed. 68 WOLFF V. KOPPEL. [CHAP. L By the Court, Cowen, J. It is objected that the contract of a factor, binding him in the terms implied by a del credere commission, is within the Statute of Frauds, and should therefore be in writing. Such is the opinion expressed by Theobald (Pr. and Surety, 64, 65), and in Chit. On Contr. 209, 210, Am. ed. of 1842. The question was also mooted in Gall v. Comber, 1 but not decided, as seems to be implied in the care- less manner in which the case is quoted by Chitty. All the authority presented on the argument grows out of the nature of the contract as held by the K. B. in Morris v. Cleasby. 2 That case certainly defines the liability of the factor somewhat differently from what several previous cases seem to have done. The effect of acting under the commission is said to be, that the factor becomes a guarantor of the debts which are created ; that is to say, they are debts due to the merchant, and the factor's engagement is secondary and collateral, depending on the fault of the debtors, who must first be sought out and called upon by the merchant. See also Hornby v. Lacy, 3 Peele v. Northcote, 4 Leverick u. Meigs. 5 On this we have the opinion of learned writers that if the agreement del credere be made without writing, the case comes within the statute. On the other hand, approved writers assert that this is not so. 1 Beawes, 46, 6th Lond. ed. ; 3 Chit. Commercial Law, 220, 221. It is true, these latter go on the more stringent obligation supposed by Lord Mansfield, — that of a principal debtor on the part of the factor, the accessorial obligation lying rather on the purchaser. This view of the matter was no longer correct after the cases I have mentioned were decided. The conse- quence sought to be derived, however, by writers, is merely specula- tive ; and the contrary has of late been directly held by the Supreme Court of Massachusetts, in Swan v. Nesmith. 6 It is said this was with- out the Court being aware of Morris v. Cleasby. Be that as it ma}', the}' seem to have been fully aware of the rule laid down in that case, and to have recognized it as correct. They considered the obligation as a guaranty. But a guaranty, though by parol, is not always within the statute. Perhaps, after all, it may not be strictly correct to call the contract of the factor a guaranty, in the ordinary sense of that word. The implied promise of the factor is merely that he will sell to persons in good credit at the time ; and in order to charge him, negli- gence must be shown. He takes an additional commission, however, and adds to his obligation that he will make no sales unless to persons absolutely solvent; in legal effect, that he will be liable for the loss which his conduct may bring upon the plaintiff, without the onus of proving negligence. The merchant holds the goods, and will not part with them to the factor without this extraordinary stipulation, and a commission is paid to him for entering into it. What is this, after all, but another form of selling the goods ? It's consequences are the same i 1 B. Moor. 279; 8 Taunt. 558, s.c. 2 4 Maule & Selw. 566, 574, 575. 3 6 Maule & Selw. 166, 171, 172. 4 7 Taunt. 478, 484; 1 B. Moor. 178, s. C. & 1 Cowen, 645, 664. 6 7 Pick. 220. SECT. I.] WOLFF V. KOPPEL. 69 in substance. Instead of paying cash, the factor prefers to contract a debt or duty which obliges him to see the money paid. This debt or duty is his own, and arises from an adequate consideration. It is con- tingent, depending on the event of his failing to secure it through another, — some future vendee, to whom the merchant is first to resort. Upon non-payment by the vendee, the debt falls absolutely on the factor. As remarked by Parker, C. J., in Swan v. Nesmith, the form of the action does not seem to be material in such case ; that is to sa} r , whether the merchant sue for goods sold, or on the special engage- ment. The latter is perhaps the settled form ; but still the action is, in effect, to recover the factor's own debt. In the late case of Johnson r. Gilbert, the defendant, in consideration of money paid for him by the plaintiff, assigned a chattel note and guaranteed its payment. In such a case the declaration must be on the guaranty to pay the debt of another ; but this is so in form merely. We held that the contract was to pay the defendant's own debt; that it was not a contract to pay as the surety of another. All such contracts and many others are, in form, to pay the debt of another, and so literally within the statute, but without its intent. A promise by A to B, that the former will pay a debt due from the latter, is not within the meaning, though it is within the words. Conkey v. Hopkins ; x Eastwood v. Kenyon. So are a numerous class of cases, where the promise is made in considera- tion of the creditor relinquishing some lien, fund, or security. Theo- bald, Pr. and Surety, 45, and the cases there cited. The merchant gives up his goods to be sold, and pays a premium. Is not this in truth as much and more than many of those cases require which go on the relinquishment of a security? Suppose a factor agrees by parol to sell for cash, but gives a credit. His promise is virtually that he will pay the amount of the debt he thus makes. Yet who would say his promise is within the statute? The amount of the argument for the defendant would seem to be, that an agent for making sales, or indeed a collecting agent, cannot, by parol, undertake for extraordinary dili- gence, because he may thus have the debt of another thrown upon him. But the answer is, that all such contracts have an immediate respect to his own duty or obligation. The debt of another comes incidentally as a measure of damages. Judgment affirmed? 1 17 John. 113. 2 Affirmed iu 2 Den. 368. In Couturier v. Hastie, 8 Ex. 40, Parke, B., delivering the opinion of the Court, said (p. 55) : " The other and only remaining point is, whether the defendants are responsible by reason of their charging a del credere commission, though they have not guaranteed by writing signed by themselves. We think they are. Doubt- less, if they had for a percentage guaranteed the debt owing, or performance of the contract by the vendee, being totally unconnected with the sale, they would not be liable without a note in writing signed by them ; but being the agents to negotiate the sale, the commission is paid in respect of that employment; a higher reward is paid in consideration of their taking greater care iu sales to their customers, and pre- cluding all question whether the loss arose from uegligence or not, and also for assuming a greater share of responsibility than ordinary agents; uamely, responsibility 70 SUTTON V. GREY. [CHAP, t SUTTON & CO. v. GREY. In the Queen's Bench Division, June 28, 1893. [Reported in 69 Law Times Reports, 354. i ] Bowen, L. J.- This is an action for a contribution to cover the loss incurred by the plaintiffs, as stockbrokers, in certain transactions which the plaintiffs allege were entered into under a contract between 1 themselves and the defendant that he should contribute to the plaintiffs! half the loss that they might incur in those transactions. The plaintiffs- had embarked upon the transactions in question for a client named Robertson, who had been introduced to them b}' the defendant. The plaintiffs alleged (though this was disputed by the defendant), that they had employed the defendant to introduce clients, Robertson amongst others, on terms that he should contribute proportionately toward an}' loss that the plaintiffs might sustain in the operations which they effected for these clients. [His Lordship stated that there had been an acute conflict of evidence, and continued :] I have weighed the matter very carefully, and observed the parties in the box, and I have come to the conclusion that the plaintiffs are correct in saying that it was arranged between them and the defendant that he should contribute to an}' loss that might occur to them upon Robertson's transactions. That being so, the only question which remains is whether or not this contract is a promise to answer for the debt, default, or miscarriage of another within sec. 4 of the Statute of Frauds, which requires such a contract to be in writing as a condition preliminaiy to its enforcement in a court of law. The defendant maintains that it is such a contract. But the plaintiffs allege that this agreement is not a promise to answer for the debt or default of another within the meaning of the Statute of Frauds, and they put their case on the same sort of ground as that on which Parke, B., decided in Couturier v. Hastie. 3 Since that decision, it must be taken to be the view of the courts that, at all events in the case of a del credere agent, who is employed to sell on the for the solvency and performance of their contracts by their vendees. This is the main object of the reward being given to thorn ; and though it may terminate in a liability to pay the debt of another, that is not the immediate object for which the con- sideration is given ; and the case resembles in this respect those of Williams v. Leper, 3 Burr. 1886, and Castling v. Aubert, 2 East, 325. We entirely adopt the reasoning of an American judge (Mr. Justice Cowen), in a very able judgment on this very point in Wolff v. Ko'ppel, 5 Hill, N.Y. Rep. 458." See to the same effect, Wickham v. Wickham, 2 K. & J. 478 (semble) ; Swan v. Nesmith, 7 Pick. 220; Suman v. Inman, 6 Mo. Ap. 384; Sherwood v. Stone, 14 N.Y. 267 ; Guggenheim v. Rosenfeld, 9 Baxt. (Tenn.) 533 ; Bradley v. Richardson, 23 Vt. 720. — Ed. 1 1893 Q. B., s. c. — Ed. 2 Everything is omitted except the opinion of the Court upon the Statute of Frauds. — Ed. 3 8 Ex. 40. SECT. I.] SUTTON V. GKEY. 71 terms of guaranteeing the solvency of the buyer, the promise which he makes is not a promise to answer for the promise of another within the Statute of Frauds. Couturier v. Ilastie, as is well known, is based on a previous American decision, Wolff v. Koppel, which has ever since been referred to as a leading authority, and has been explained in different ways in different cases. That Couturier v. Hastie was in some cases a strong decision, having regard to the express words of the statute, may, I think, be taken to be the view of many judges ; and I would refer in particular to the case of Wickham v. Wickham, 1 from which I think it appears that the case is one which has been supposed to have gone to an extreme in distinguishing between promises which are, and which are not, within the statute. Nevertheless, it seems to me to have been the view of the Court in Couturier v. Ilastie that sect. 4 of the Statute of Frauds does not strike at promises which are not in the direct object of the giving of the consideration, and that therefore the terms of a del credere agency, which included a guaranty for the future debt of the person to whom goods were to be sold, was really to be regarded rather as a contract, the object of which was not to guarantee the debt, but to settle the terms upon which the agent should be employed to sell. It seems to me that although Couturier v. Hastie is not exactly in point, it would be perhaps introducing too fine a distinction if I were to endeavor to distinguish between it and the present case. It is certain that the object of the contract in the pres- ent case was that the defendant should introduce responsible persons to the plaintiffs, and the contract included a guaranty that he would indemnify the firm against his not doing so. That, I think, is really a contract which regulates the terms of the agency, and the defendant's liability to answer for the debt of another is only an ulterior conse- quence of the terms in which the contract is framed. I think I am bound to abstain from drawing too fine distinctions between the present case and Couturier v. Hastie, and I therefore hold that the defendant is not shielded from liability by the provisions of the Statute of Frauds, because this is not a promise to answer for the debt of another within sect. 4. Of course, if this is a partnership, the second point does not arise. I therefore give judgment for the plaintiff for the amount claimed, £1,143 4s. M. Judgment for plaintiffs. 2 i 2 K. & J. 478. 2 Affirmed in the Court of Appeal, '94, 1 Q. B. 285. — Ed. 72 WILLIAMS V. LEPER. [CHAP. L WILLIAMS v. LEPER. In the King's Bench, May 2, 1766. [Reported in 3 Burrow, 1886.] One Taylor, a tenant to the plaintiff, being three quarters of a year (which amounted to £45) in arrear for rent, and insolvent, conveyed all his effects for the benefit of his creditors. 1 They employed Leper, the defendant, as a broker, to sell the effects ; and, accordingly, he adver- tised a sale. On the morning advertised for the sale, Williams the landlord came to distrain the goods in the house. Leper, having notice of the plaintiff's intention to distrain them, promised to pay the said arrear of rent, if he would desist from distraining ; and he did there- upon desist. At the trial, a verdict was found for the plaintiff, for £45. The question was whether the verdict should be entered up for £45 or for a smaller sum (£7 os.), the promise not having been reduced to writing. It was now argued by Mr. Morton and Mr. Walker for the plaintiff; and by Sir Fletcher Norton and Mr. Wallace for the defendant. The counsel for the plaintiff spoke to this effect : — It is objected on the part of the defendant, " That this is an under- taking or special promise for the debt of another person, within the Statute of Frauds ; and therefore ought to have been reduced into writing." Answer : — But this is not such a special promise for the debt of another, as is within the Statute of Frauds. That statute only meant to prevent parol promises, where there was no new consideration moving from the party making the promise to the party to whom it was made : it was not meant to prevent direct undertakings ; but only collateral ones, for the debt, default, or miscarriage of others. Whereas here was a new consideration ; for, the goods of Leper were, at the time of the promise, liable to the landlord's distress. The case of Rothery v. Curry ~ in C. B. has been urged by the defen- dant's counsel, as in point. But that was only putting him off from suing, "in consideration that the plaintiff would not sue A. B." It was held to be within the statute. Bnckmyr v. Darnall — "In consideration that the plaintiff would lend two geldings to A. B. and C. D. the}' should return them" — was held to be collateral and within the statute. Fish v. Hutchinson 3 was for a debt of another : " J. S. being indebted to the plaintiff in £8 4s. the defendant promised to pay the costs, if the 1 By the report of the case in 2 Wils. 308, it appears that Leper was the grantee in the conveyance by Taylor in trust for his creditors. — Ed. 2 Tr. 21 G. 2. 3 2 Wils. 94. SECT. I.J WILLIAMS V. LEPER. 73 plaintiff would discontinue the action," which he did. The promise, not being in writing", was holden void, by the whole court. But those were mere naked promises by persons not obliged to an- swer for the debt or demand, on their own account. The present case is a direct undertaking, for himself, and not for another. The plaintiff had a legal interest in these goods, prior to the bill of sale, and has been deprived by the defendant of an advantage which he can never have again. The property of these goods was in Leper, as trustee for the creditors, at the time when he made this promise. It is an original undertaking. The case of Reid v. Nash is in point — "• hi consideration that the plaintiff would withdraw his record, and not try the cause, he promised to pay £50." That was an original undertaking. So, in Stephens v. Squire, 1 — It was not a promise for a debt of another person : the de- fendant was himself originally liable. It was a promise to pa}' £10 and costs of suit, in consideration " That the plaintiff would not prosecute the action." This promise "To pay the arrears, if the plaintiff would desist from distraining," is a new express promise, and not within the statute. Therefore it was not necessary that this promise should be in writing. It was not a collateral undertaking, but an original one. The counsel for the defendant insisted, that upon this declaration, coupled with the facts given in evidence, the plaintiff had no right to recover this £45. For the declaration expressly charges " That Taylor was indebted to the plaintiff in £45 for | of a year's rent; and that the defendant undertook to pay it," which is directly within the words of the Statute of Frauds, "a special promise to answer for the debt of another person." Leper was in possession of the goods of the tenant, who owed the plaintiff three quarters' rent ; and about to sell them. The landlord comes to distrain for this three quarters of a year's rent. Leper prom- ises to pay it, "if he will desist from distraining." He promises absolutely — " to pa} T it ; " not '•' to pay it out of the goods sold," or under any other restriction. A forbearance to sue is a good consideration for an assumpsit. Before the Statute of Frauds, all promises were binding, whether original or collateral. But that statute says, that " where one promises for the debt, default, or miscarriage of another the promise must be in writing." The cases of Fish v. Hutchinson 2 and Reid v. Nash are both upon the same principle : both were collateral promises. The second promise did not extinguish the original debt ; it did not extinguish the action. Therefore both were liable for the same debt. The original debtor remained liable ; and therefore the promise was collateral, and con- sequently within the act. Indeed, if the original debtor is discharged, 1 5 Mod. 205. 3 i Wils. 94. 74 WILLIAMS V. LEPEK. [CHAP. I. then it is an original promise and not collateral, which was the. case of Reid v. Nash : that was an action of trespass for assault and battery brought by Reid against Johnson ; and the defendant promised " That if the plaintiff would withdraw his record, he would pay £50, &c." It was an original tort. Therefore that case was not contrary to Fish v. Hutchinson, but determined upon the same principle. The plaintiff cannot recover upon this declaration : it is upon a prom- ise " to pa}' the debt to which Taylor was before liable ; " and Taylor still remains liable, till actual satisfaction. Therefore this is a collateral promise, and both are liable. Consequently, 'tis within the act. If indeed the declaration had averred "That Leper promised to pay it out of the produce of the goods when sold ; and that in consideration of that promise, he had desisted from distraining," — that had been a different case. Lord Mansfield. The evidence went further than the declaration states. The declaration does not state whether the promise was in writing or not ; the evidence shows it was not. But both are consistent. This case has nothing to do with the Statute of Frauds. The res gesta would entitle the plaintiff to his action against the defendant. The landlord had a legal pledge. He enters, to distrain ; he has the pledge in his custody. The defendant agrees "'That the goods shall be sold, and the plaintiff" paid in the first place." The goods are the fund ; the question is not between Taylor and the plaintiff. The plain- tiff had a lien upon the goods. Leper was a trustee for all the creditors, and was obliged to pa}' the landlord, who had the prior lien. This has nothing to do with the Statute of Frauds. It is rather a fraud in the defendant, to detain the £45 from the plaintiff, who had an original lien upon the goods. Me. Justice Wilmot thought this case out of the Statute of Frauds. This is not a collateral promise to pay the debt of another. The case of Reid v. Nash does not clash with the other determinations on the Statute of Frauds. That was an original undertaking : the debtor was never liable for that particular sum of £50. But this case is not within the spirit or meaning of the act. The tenant was here the original debtor. The plaintiff had two remedies against him. The defendant made a bill of sale of the goods liable to the plaintiff's distress. The plaintiff is in possession of the goods, having entered with intent to distrain them. Leper was the agent for the creditors. He makes this promise, in order to discharge the goods of this distress. I consider this distress as being actually made. Leper says, " if you will quit the goods and disencumber the fund, I will pay vou." Leper became the bailiff of the landlord ; and when he had sold the goods, the money was the landlord's (as far as £45) in his own bailiffs hands. Therefore an action would have lain against Leper for money had and received to the plaintiff's use. SECT. I.] WILLIAMS V. LEPER. 75 Mr. Justice Yates. It was not necessary to state in the declaration, " That the promise was in writing." This declaration states a promise " to pay the arrear of rent amount- ing to £45 '*. (a specific sum). The defendant was in possession of the goods, and about to sell them. The plaintiff entered, with intent to distrain them for £45. The defendant says — "Let me go on to sell them, and I will pay you the £45." He undertook to pay this, in all events, peremptorily and absolutely. This is an original consideration to the defendant. Therefore he concurred in being of opinion for the plaintiff, and that the verdict should be entered for the sum of £45. Mr. Justice Aston. If this was a promise to pay the debt of Taylor, I should think it within the statute, upon Sir Pletcher Norton's distinc- tions, which are the true ones. But I look upon the goods here to be the debtor ; and I think that Leper was not bound to pay the landlord more than the goods sold for, in case they had not sold for £45. The goods were a fund between both, and on that foot I concur. But otherwise, I should have thought (with Sir Fletcher) " That the case of Reid v. Nash does not clash with the other determinations about collateral promises." Postea to be delivered to the plaintiff , and the verdict to stand for the ivhole £45. l 1 Castling v. Aubert, 2 East, 325; Edwards v. Kelly, 6 M. & Sel. 204; Bampton v. Timlin, 4 Bing. 264, 12 Moo. 497, s. C. ; Walker v. Taylor, 6 C. & P. 752 ; Fitzgerald v. Dressier, 7 C. B. n. s. 374; Blount v. Hawkins, 19 Ala. 100; Westmoreland v. Torter, 75 Ala. 452 (semble) ; Scott v. White, 71 III. 287 ; Bunting v. Darbyshire, 75 111. 408; Borehsenias v. Canutson, 100 111. 82 ; Luerk v. Malone, 34 Ind. 444 (qualifying Spooner v. Dunn, 7 Ind. 81) ; Conradt v. Sullivan, 45 Ind. 180; Crawford v. King, 54 Ind. 6; Mitchell v. Griffin, 58 Ind. 559; Barker v. Dillingham, 129 Ind. 542; Morrison v. Hogue, 49 Iowa, 574 ; llelt r. Smith, 74 Iowa, 667 ; Fish v. Thomas, 5 Gray, 45 ; Burr v. Wilcox, 13 All. 269; Hodgkins v. Ileaney, 15 Minn. 185 ; Abbott v. Nash, 35 Minn. 451 ; Kansas Co. v. Smith, 36 Mo. Ap. 608 ; Hogers v. Emkie, 24 Neb. 653 ; Joseph v Smith, 39 Neb. 259 ; First Bank c. Dohm, 52 N. J. 363 ; Ludwick v. Watson, 3 Oreg. -256; Arnold v. Stedman, 45 Ta. 186 ; Landis v. Royer, 59 Ta. 95 ; Smith v. Exchange Bank, 110 Fa. 508; Bailey v. Marshall (Fa. 1896), 34 Atl. R. 326 ; Lampson v. Hobart, 28 Vt. 697 ; Cross v. Bichardson, 30 Vt. 641 ; Templeton v. Bascom, 33 Vt. 132; Weisel v. Speuce, 59 Wis. 301 ; Green v. Hadfield, 89 Wis. 138, Accord. Warner v. Willoughby, 60 Conn 471, Contra. See 4 Harv. L. Rev. 290. — Ed. 76 MALLOKY V. GILLETT [CHAr. 1 MALLORY v. GILLETT. In the Court of Appeals, New York, June, 1860. [Reported in 21 New York Reports, 412.] Comstock, Ch. J. 1 This case ought to be one of first impression. By the Statute of Frauds, all promises to answer for the debt of a third person are void unless reduced to writing. One Haines owed the plain- tiff a debt for repairs on a boat, for which the latter had a lien on the chattel. In consideration of the relinquishment of that lien, and of for- bearance to sue the original debtor, the defendant promised the plaintiff, without writing, to pay the debt at a certain future time. There is no pretence that the defendant's promise was given or accepted as a sub- stitute for the original demand, or that such demand was in any manner extinguished. The promise was, therefore, to answer for the existing and continuing debt of another, or, in the language of the books, it was a collateral promise. The consideration was perfect, but as there was no writing, the case seems to fall within the very terms of the statute. Authorities need not be cited to prove that the sufficiency of the con- sideration never takes a case out of the statute. Indeed, there can be no question under the Statute of Frauds in any case, until it is ascer- tained that there is a consideration to sustain the promise. Without that element, the agreement is void before we come to the statute. A naked promise is void on general principles of law, although it be in writing. The mere existence of a past debt of a third person will not sustain an agreement to pay it, unless there be forbearance to sue, or some other new consideration. In such a case, when we find there is a new consideration, we then, and not till then, reach the inquiry whether the agreement must be in writing. Such is this case. It is nothing to say that here was a new consideration. If such were not the fact, there would be no question in the case. There is sometimes danger of error creeping into the law through a mere misunderstanding or misuse of terms. The words "original" and " collateral " are not in the Statute of Frauds, but they were used at an early day, — the one to mark the obligation of a principal debtor, the other that of the person who undertook to answer for such debt. This was, no doubt, an accurate use of language ; but it has sometimes hap- pened that, by losing sight of the exact ideas represented in these terms, the word " original " has been used to characterize any new promise to pay an antecedent debt of another person. Such promises have been called original, because they are new ; and then as original undertak- ings are agreed not to be within the Statute of Frauds, so these new promises, it is often argued, are not within it. If the terms of the statute were adhered to, or a more discriminating use were made of 1 Everything is omitted except the opinion of Co.mstock, C. J. — Ed, SECT. I.] MALLORY V. GILLETT. 77 words not contained in it, there would be no danger of falling into errors of this description. What is a promise to answer for the "debt or default" of another person? Under this language, perplexing questions may arise, and many have arisen, in the courts. But some propositions are extremely plain; and one of them is, that the statute points to no distinction be- tween a debt created at the time when the collateral engagement is made, and one having a previous existence. The requirement is, that promises to answer for the debt, etc., of a third person, be in writing. The original and collateral obligations may come into existence at the same time, and both be the foundation of the credit, or the one may exist and the other be created afterwards. In either case, and equally in both, the inquiry under that statute is, whether there be a debtor and a surety, and not when the relation was created. The language of the enactment is so plain that there is no room for interpretation ; and its policj' is equalby clear. If A say to B, "If you will suffer C to incur a debt for goods which 3011 will now or hereafter sell and deliver to him, I will see you paid," the promise is within the statute. This no one ever doubted. But if A say to B, " If you will forbear to sue C for six months on a debt heretofore incurred bv him for ooods sold and delivered to him, I will see you paid" — is not the case equalh; plain? So if, in such a case, instead of forbearance*, there is some other sufficient consideration, for example, forgiving a part of the debt or relinquishing some securit}' for it, the difference is still one of circum- stance, but not of principle. In the case first put, the consideration of the guaranty is the original sale of the goods on the faith of it : in the other, it may be forbearance or the relinquishment of some advantage, the original debt still remaining. Looking at the comparative merit of these considerations, it would seem to be the highest in the first case, for the whole debt owes its origin to the collateral promise, while in the other the debt remains as before, and onby some collateral advantage is lost. But the application of the statute depends on no such test. These considerations are, all of them, sufficient, and simply sufficient, to sustain the auxiliary undertaking. But if they also dispense with a writing, then, so far as I can see, there are no cases to which this branch of the Statute of Frauds can be applied. Such an extreme position has not been taken ; but it is said that the promise now in question need not be in writing, because it was new and original, and was founded on the relinquishment to the debtor of a security which the creditor held. To say that it was new and original, expresses no idea of any importance. Ever}' promise is new and original that was never made before. An undertaking to answer for an old debt of a third person certainly has no more of originality than one to answer for a debt now contracted. As to the relinquishment of the lien or security, this, although a meritorious consideration, is, in judgment of law, no more so than any other which is sufficient to sustain a contract. Forbearance to sue has the same legal merit, and so has the release of a part of the debt. 78 MALLOKY V. GILLETT. [CHAP. 1 There is nothing so remarkable or peculiar about this case that it may not be included in some general proposition which involves a principle of law. Now, one of these two propositions must, I think, be true : 1. The Statute of Frauds never applies to a promise, the subject of which is an antecedent debt of a third person to which it is collateral ; or, 2. It applies to all such promises where the consideration moves solely between the creditor and original debtor, and the debt still remains. If the first is true, then the promise in question is valid without a writing, and so would any such promise be, without regard to the particular nature of the consideration ; it being necessary, of course, that there should be some sufficient consideration. If the first be not true, and the second is, then the promise in this case is void, because it falls directly within it. The first proposition cannot be true, upon the plain terms and evident policy of the statute ; and no such doctrine was ever asserted. The universal truth of the second one necessarily follows, unless the law will discriminate between different promises according as the considera- tion ma}' differ in the particular nature or kind. But is such a discrimina- tion possible, so long as, in any given case, the consideration is sufficient in the eye of the law, and moves solely between the original parties? No one, it seems to me, can hesitate to answer such a question in the negative. Yet we are told, without reason or principle, that when a creditor releases a securitv to the debtor, although without releasing the debt, a promise of another person, founded on that peculiar considera- tion, is not within the statute. The inevitable logic of such a proposi- tion will include a like promise founded on any other consideration equally sufficient to sustain a contract; and, therefore, we are carried back to the first general proposition above stated, which is admitted to be false. It has already been observed, that, without a consideration, no question on the Statute of Frauds can arise. In this elementary view of the question, I do not understand that much difference of opinion exists. It is claimed, however, that the course of adjudication has been such, that we cannot determine the case before us according to a consistent rule of law. This argument is founded in a misapprehension of the authorities, some reference to which will be necessary. In this State, an early case, and one of very high authority, is that of Leonard v. Vredenburgh, 1 in which Chief Justice Kent divided the cases on this branch of the Statute of Frauds into three classes, as follows: 1. Where the promise is collateral to the principal contract, but is made at the same time, and becomes an essential ground of the original credit. 2. " Cases in which the collateral undertaking is subsequent to the creation of the debt, and was not the inducement to it, though the sub- sisting liability is the ground of the promise." " Here," the Chief Justice observed, "there must be some further [or new] consideration shown, having an immediate respect to such liability ; for the considera- 1 8 Johns. 29. SECT. I.] M.YLLORY V. GILLETT. 79 tion of the original debt will not attach to this subsequent promise. 3. Cases where the promise to pay the: debt of another arises out of some new and original consideration of benefit or harm moving between the newly contracting parties." "The two first classes," be further observed, " are within the Statute of* Frauds, but the last is not." I sup- pose, in the light of later decisions, that the opinion of that great jurist, delivered in the case cited, may contain some inaccurate remarks respect- ing the right to prove a consideration for a collateral agreement where none appeared in the writing. It would be so considered, especially since the change we have made in the language of the Statute of Frauds, requiring the consideration to be expressed in the collateral instrument. But the above classification of the cases, and the connected remarks respecting each class, are strictly correct, and they have been a land- mark of the law for forty years. Does the present case belong to- the second class, which is within the statute, or to the third, which is not? Manifestly it belongs to the second, because that is a class where the undertaking is subsequent to the creation of the debt. It does not fall without that class in consequence of the newness of the consideration, because, the learned Chief Justice said, "here must be some further [new] consideration having an immediate respect to such liability." It cannot fall within the third class, because, if we arrange it there, we necessarily compress the two classes into one, or, more properly speaking, we merge the second wholly into the third. In such a disposi- tion of the present question, no second class is left of collateral under- takings subsequent to the creation of the original debt, founded, as they must be. on some new or " further consideration." The classification referred to, on a casual reading, is perhaps open to some misapprehension, and I think it has been occasionally misappre- hended. What, then, is the true distinction between the second and third classes? The}' are both of them promises, in form at least, to pay the antecedent debt of a third person, and in that respect they are alike. The distinction, therefore, is in the consideration of the prom- ises which belong to the two classes ; not in respect to its particular nature or kind, but in respect to the parties between whom it moves. In the one class, the consideration is characterized as a ' ' further one, having immediate respect to the [original] liability" of the debtor; in the other, as " new and original moving between the newly contract- ing parties." In the second class, the new or " further" consideration moves to the primary debtor. It ma}' consist of forbearance to sue him, of a release to him of some security, or of any sufficient benefit to him or harm to the creditor, but in which the collateral promisor has no interest or concern. In the third class, the consideration, whatever its nature, moves to the person making the promise, and that also, as in all other cases of contract, may consist of benefit to him or harm to the party with whom he is dealing. This distinction is also extremely well expressed b}' Chief Justice Shaw, of the Supreme Court of Massachu- setts. One class of cases (within the statute), he says, is "where the 80 MALLOKY V. GILLETT. |_CHAP. I direct and leading object of the promise is to become the surety or guarantor of another's debt;" the other class (not within the statute) is " where, although the effect of the promise is to pa} - the debt of another, yet the leading object of the undertaker is to subserve or promote some interest or purpose of his own." Nelson v. Boynton. 1 Chief Justice .Savage, in this State (Farley v. Cleveland' 2 ), made the same classification. " In all these cases," he observed, referring to those which fall within the third class, kt founded on a new and original consideration of benefit to the defendant or harm to the plaintiff, moving to the party making the promise, either from the plaintiff or original debtor, the subsisting liabilit}' of the original debtor is no objection to a recovery." In one respect, this language of Chief Justice Savage has greater precision than that of Chief Justice Kent. The latter speaks of the consideration as kt moving between the newly contracting parties." The former characterizes it as moving to the party making the promise. This description is more exact, as well as more comprehensive, because it includes a variety of cases found in the books, where the new consid- eration springs from the original debtor and not the creditor, as, for example, where the debtor, by conveyance of property or otherwise, places a fund in the hands of a third person, the latter promising, in consideration thereof, to pay the debt. But the difference is not one of principle, because there is a sense in which, even in such cases, the new consideration moves from the creditor through the debtor to the person making the promise, and on that ground many cases hold that the creditor may himself sue on the promise, although it was made to the debtor. Lawrence v. Fox. 3 Where the promise in this particular description of cases has been made directly to the creditor, the only question has been on the Statute of Frauds ; and the rule is very prop- erlv settled that they are not within the statute. The cases of Farley v. Cleveland, 4 Gold v. Phillips, 5 and Olmstead v. Greenley 6 belong to tliis class. Omitting, then, the first class of collateral undertakings — I mean those made at the same time with the creation of the debt — as having nothing to do with the present question, there are two kinds of promises of extensive use in the dealings of community, which, in form and effect, very much resemble each other ; each being to answer for or pay a debt already due or owing from a third person, yet wholly different in respect to the motive and consideration. In the one class the promisor has no personal interest or concern, and his undertaking is made solely upon some fresh consideration passing between the creditor and his debtor. This class is within the statute. In the other, the promise may be in the same form, and, when performed, may have the same effect, but it is made as the incident of some new dealing in which the promisor is himself concerned, and upon a consideration passing be' 1 .3 Mete. 396-400. 2 4 Cow. 432, 439. 3 20 N. Y. 268, and the cases cited. * 4 Cow. 432, 439. 5 10 John. 412. 6 18 Id. 12. SECT. I.J MALLOKY V. GILLETT. 81 tvveen the creditor or the debtor and himself. This class, which may include a great variety of particular examples, is not within the statute. The distinction is broad and intelligible, although the formal resemblance in such transactions may have occasionally led to inaccuracy of expres- sion or decision. The great body of the cases, however, will be found to illustrate this distinction, and to establish it firmly as a guide in this branch of the law. If such a distinction were a questionable one, the tendency of the doubt would necessarily be in the direction of holding both classes of cases to be within the statute, but never in the direction of placing without the statute any one of the cases belonging to the first of these classes. With this classification before us, it will be proper to notice more in detail the cases cited on the argument, and others not cited. . . - 1 It cannot fail to be seen that nearly all the cases which have been •mentioned, in fact all of them which exhibit a promise to pay or answer for the debt of another person, are essentially of one type. With great variety in the circumstances, one controlling characteristic pervades them all. In every instance, the consideration of the promise was bene- ficial to the person promising. This was the feature which imparted to the promise the character of originality, as that term is used with reference to the Statute of Frauds. In not one of them is it true that the undertaking was entered into upon a consideration merely bene- ficial to the debtor but of no concern to the promisor; and I can con- fidently say that not one of those cases contains even a dictum which, being understood, countenances the doctrine contended for on the part of the plaintiff in this case. Yet it would not be true to say that the plaintiff's position is wholly unsupported by any authority in the courts of this State. In Mercein v. Andrus, 2 Savage, Ch. J., made this remark on a motion for a new trial : "The judge correctly stated to the jury that where the promise of one person to pay the debt of another was founded upon the consideration of surrendering up property levied on by an execution, the promise was an original undertaking, and need not be in writing to be valid." Of course, no such point was decided, because the decision granted a new trial upon another question not material to the present inquiry. The Chief Justice cited no authority. If he meant to lay down the doctrine, that a new consideration, moving from the creditor to the debtor, the debt still remaining, would sustain the unwritten promise of another person to pay the debt, there was no authority to be cited, for no such proposition had ever been advanced in this State. If, however, the charge at the trial and the observation of the Chief Justice assumed, as 1 The learned judge here discussed Gold v. Phillips, 10 Johns. 412; Bailey v. Free- man, 11 Johns. 221 ; Nelson v. Dubois, 13 Johns. 175 ; Myers v. Morse, 15 Johns. 42.") ; < )lmstead v. Greeley, 18 Johns. 12 : Farley o. Cleveland, 4 Cow. 432 ; Chapin v. Merrill, 4 Wend. 657 ; Gardiner v. Hopkins, 5 Wend. 23 ; Elwood v. Monk, 5 Wend. 235 ; King v. Despard. 5 Wend. 277 : and Meech v. Smith, 7 Wend. 315. -Ed. 2 10 Wend. 461. 6 82 MALLOEY V. GILLETT. [(JIIAP. L the law was, that the levy of an execution extinguished the debt, and that the release of the levy remitted the creditor to the new promisor as his only remedy, then the remark was strictly correct, but it has no application to this case. Such is probably the true explanation ; and we shall presently see there are English cases under the statute standing on that ground. The plaintiff's counsel has been able, however, to cite one case which is entirely to his purpose. In Fay v. Bell, 1 the plaintiff had a lien on a pair of boots which he had mended, and in consideration of releasing that lien and giving up the boots, the defendant promised to pay his demand, which amounted to fifty cents. So far as appears, the debt still remained. The case went up from a justice's court, through the Common Pleas, to the Supreme Court, where the question was disposed of with the single observation that the promise was " a new undertaking, founded on a new and distinct consideration, the relinquish- ment by the plaintiff of his lien on the boots, and which was sufficient to uphold the promise made." The remark, as made, is strictly true. The consideration was clearly sufficient to uphold the promise, but the Statute of Frauds requires not only a consideration but a writing. The case was of very slight importance, and the principles of the question were not examined. In the same book is another case, preciselv the other way, the opinion being given by another judge. In Van Slyck v. Pulver, 2 the promise was made in consideration that the plaintiff would suspend proceedings on an execution against his debtor. This forbear- ance was admitted to be a sufficient consideration, and it was certainly a new one ; but the promise was held void within the statute. In all the judicial history of this State, then, there is but one adjudged case which sustains the doctrine contended for, and that is one entitled to no great consideration. I will now refer to several of a very decisive character, which furnish a true exposition of the statute, and show that the rule is the other wa}\ . . . 3 These numerous authorities are decisive. They all present examples where the collateral undertaking was founded on a consideration suffi- cient to sustain the promise, but of no personal concern to the promisor ; yet the promises were void, because they fell within the precise terms and the undoubted polic} T of the Statute of Frauds. Certainly, that statute was not enacted for cases where the promise would be void at the com- mon law for want of a consideration to sustain it. If it was not enacted for the very cases where a new consideration arises, additional to the original debt, that being insufficient according to all authority, then why was it ever passed ? Indeed, the struggle in the courts has been to withdraw from its influence, not such cases as these, but others having a close formal resemblance, yet distinguishable, not because there is a 1 Lalor's Supp. to Hill and Denio, 251. 2 Lalor, 47. 3 The learned judge here discussed Simpson v. Patten, 4 Johns. 422; Jackson v. Bayner, 12 Johns. 291 ; Smith v. Ives, 15 Wend. 182 ; Packer v. Wilson, 15 Wend. 343; Watson v. Randall, 20 Wend. 201 ; Barker v. Bucklin, 2 Den. 45 ; and Kingsley v. Balcom, 4 Barh. 131.— Ed. SECT. I.] MALLORY V. GILLETT. 8 o consideration, but because it moves to the promisor, and so gives to his undertaking an original character. A person who receives a con- sideration may be bound by any lawful promise founded upon it, and that promise may as well lie to pay another man's debt as to do any ot her act. The success of this struggle, in a variety of instances not within the intent of the statute, should not overthrow the very object for which it was enacted. This discussion would be incomplete without referring to the rule elsewhere than in this State. I have already mentioned the case of Nelson v. Boy n ton, 1 which may be regarded as settling the question in Massachusetts. The creditor in that case sued his debtor and seized his property under an attachment. The defendant promised to pay the debt in consideration of a discontinuance of the suit. The suit was discontinued accordingly, and the lien of the attachment was thereby lost, but the debt remained against the original debtor. It was held, upon the fullest consideration, Chief Justice Shaw giving the opinion, that the promise was void because it was not in writing. I regard the decision as of great value, because the cases were exam- ined, and the discrimination between the different classes was made with entire accuracy. . . .~ Without pursuing this discussion further, the general rule is, that all promises to answer for the debt or default of a third person must be in writing, whether the promise be made before, at the time, or after the debt or liability is created. Such is the rule, because so is the Statute of Frauds. The statute makes no exception of any promise which is of that character. The courts have made no exceptions ; as clearly they should not. But a considerable variety of undertakings, having points of resemblance and analog}* to such promises, have been held not to be within the statute. These may be chiefly, if not wholly, arranged in the following classes: 1. Where there was no original debt to which the auxiliary promise could be collateral ; for example, where the promisee was a mere guarantor for the third person to some one else, and the promisor agrees to indemnify him, or where his demand was founded in a pure tort. 2. Where the original debt becomes extinguished, and the creditor has onby the new promise to rely upon ; for example, where such new undertaking is accepted as a substitute for the original demand, or where the original demand is deemed satisfied by the arrest of the debtor's body or a levy on his goods, the arrest or levy being discharged by the creditor's consent. 3. Where, although the debt remains, the promise is founded on a new consideration which moves to the promisor. This consideration may 1 3 Mete- 396. 2 The learned judge here discussed the decisions in the English courts, saying in conclusion : "I think it may be safely affirmed that no case has ever been determined in those courts tending to the proposition that a parol promise to pay the debt of an- other is valid when the consideration is beneficial only to the debtor, and where there is a debt which still remains against him." — Ed. 84 MALLORY V. GILLETT. [CHAP. 1 come from the debtor, as where he puts a fund in the hands of the promisee, either by absolute transfer or upon a trust, to pay the debt, or it may be in his hands charged with the debt as a prior lien, as in the case of Williams y. Leper, and many others. So the consideration ms.) originate in a new and independent dealing between the promisor and me creditor, the undertaking to answer for the debt of another neir » one of the incidents of that dealing. Thus, A. for any compensa- te-! agreed on between him and B, may undertake that C shall pa} T his- debt to B. So A, himself being the creditor of C, ma}' transfer the obli- gation to B upon any sufficient consideration, and guarantee it by parol. If we go beyond these exceptional and peculiar cases, and withdraw join the statute all promises of this nature, where the debtor alone is- benefited by the consideration of the new undertaking, and the debt »till subsists, then we leave absolutely nothing for the statute to operate upon. The judgment should be affirmed. 1 Selden, Denio, Clerke, and Welles, JJ. , concurred. 2 1 Clancy v. Piggott, 2 A. & E. 473: Rounce v. Woodyard, 8 Law Times, 186, Feunell v. Mulcahy, 8 Ir. L. R. 434 ; Dillaby v. Wilcox, 60 Conn. 71 ; Murto v. Mc- K night, 28 111. Ap. 238; Home Bank v. Waterman, 134 111. 461 ; Vaughn v. Smith, 65 Iowa, 579; Nelson v. Boynton, 3 Met. 396; Corkins v. Collins, 16 Mich. 478 ; Stewart v. Jerome, 71 Mich. 201 ; Walther v. Merrill, 6 Mo. Ap. 370 (semble) ; Cowen- hoven v. Howell, 36 N. J. 323 ; Van Slyek v. Pulver, Hill & D. 47 ; Stern v. Drinker, 2 E. D. Sm. 401; Brown v. Weber, 38 N. Y. 187 (semble); White v. Rintoul, 108- N. Y. 222 (semble); Gump v. Halberstadt, 15 Oreg. 356 (semble); Gray v. Herman, 75 Wis. 453 ; Bray v. Parcher, 80 Wis. 16, Accord. Houlditch v. Milne, 2 Esp. 86 (semble) ; Stewart v. Hinkle, 1 Bond, 506 ; Travis- ?;. Allen, 1 St. & P. 192 ; Dunbar v. Smith, 66 Ala. 490; Prout v. Webb, 87 Ala. 593 (semble) ; Williams v. Hill, 3 Mack. 100; Allen v. Thompson, 10 N. H. 32; Robinson v. Oilman, 43 N. H. 485 ; Fay v. Bell, Hill & D. 251 (overruled) ; Adkinson v. Bar- field, 1 McC. 575; Dunlap v. Thorne, 1 Rich. 213 (explaining Boyce v. Owens, 2 McC. 208), Contra. It seems now to be everywhere agreed that a promise to a creditor to pay him the debt of another, in consideration of mere forbearance by the creditor, is within the Stat- ute of Frauds. King v. Wilson, 2 Stra. 873; Fish v. Hutchinson, 2 Wils. 94; Tom- linson v. Gell, 6 A. & E. 564 ; Westmoreland v. Porter, 75 Ala. 452 ; Scott v. Thomas, 2 111. 58; Krutz v. Stewart, 54 Ind. 178; Jones v. Walker, 13 B. Mon. 356 ; Stewart v. Campbell, 58 Me. 439 (overruling Russell v. Babcock, 14 Me. 139) ; Thomas v. Delphy, 33 Md. 373; Dexter v. Blanchard, 11 All. 365; Musick v. Musick, 7 Mo. 495 ; Lang v. Henry, 54 N. H. 57 ; Duffy v. Wuusch, 42 N. Y. 243 ; Roe v. Barker, 82 X. Y. 431 ; White v. Rintoul, 108 N. Y. 222 ; Gump v. Halberstadt, 15 Oreg. 356 ; Caston v. Moss, 1 Bail. (S. Ca.) 14 ; Harrington v. Rich, 6 Vt. 606 ; Young v. French, 35 Wis. Ill; Clapp v. Webb, 52 Wis. 638. — Ed. 2 Bacon, J., delivered a dissenting opinion, in which Davies and Weight, JJ, concurred. SECT. I.] AMES V. FOSTEK. 85 ADAMS AMES v. T. P. FOSTER and Another. In the Supreme Judicial Court, Massachusetts, March, 1871. [Reported in 106 Massachusetts Reports, 400.] Morton, J. 1 The only question involved in this case arises under that clause of the Statute of Frauds which provides that no action shall be brought " to charge a person upon a special promise to answer for the debt, default, or misdoings of another, unless the promise, or some memorandum or note thereof, is in writing, and signed by the party to be charged, or his agent." Gen. Sts. c. 105, § 1, cl. 2. The plaintiffs in the original action claim to hold the defendant upon the ground of an express promise to pay the amount of a debt due the plaintiffs by the owners of the steamer " N. P. Banks," for wood and coal furnished prior to October 1, 18G8. At this time, McKay & Aldus, of Boston, owned three-fourths of the steamer, and the other fourth was owned by parties in New York. In December, 18G8, McKay & Aldus went into bankruptcy, having previously mortgaged their interest to the defendant Ames. In the spring of 1869 the plaintiffs heard that the steamer was to be carried to New York to be sold, and they threatened to attach her, and thereupon Ames promised to pay the bill if they would not attach her. It is to be observed that Ames was not originally liable upon the bill, being merely a mortgagee. Howard v. Odell. 2 The plaintiffs do not claim that they had a lien upon the vessel. They had no right to attach the interest of McKay & Aldus, who were in bankruptcy. The only legal consideration, therefore, of the defendant's promise, was the forbearance of the plaintiffs to attach the interest of the New York owners. Upon this state of facts, the learned judge who presided at the trial instructed the jury that " if, for the benefit and at the request of Ames, the said Foster gave up or surrendered some advantage which lie had, such as a means of collecting his debt or the like, and in consideration thereof Ames promised to pay this bill, he would be liable, although the promise was not in writing." We do -not think that these instructions, applied to the facts of this case, were correct or sufficient. As we have seen, the only consideration of the defend- ant's promise was that the plaintiffs forbore to attach the interest of the New York owners; and we are of opinion that the jury should have been instructed that such promise was within the Statute of Frauds. The defendant's promise was, in its primary and essential character, a promise to guarantee the debt of another. Its object was, to secure the payment of the old debt, which was not extinguished. The de- fendant's liability was collateral and contingent, would exist as long 1 Only the opinion of the Court is given. — Ed. 2 I Allen, 85. S6 AMES V. FOSTER. [CHAP. I as the original debt existed, and would be extinguished whenever the original debtors should pay that debt. It was not in any sense his debt ; the original party remained liable ; and there is an entire ab- sence of any liability on the part of the defendant or his propert} - , except such as arises from his express promise. Forth v. Stanton. 1 When all these elements concur, we know of no case in this Common- wealth which sanctions the doctrine that such promise loses its char- acter as collateral, and becomes an original promise, because there is a consideration which is beneficial to the promisor. In Alger v. Scoville, 2 Shaw, C. J., says, that "it has been held that when the leading and obvious object of the promisor was to induce the promisee to forego some lien, interest, benefit, or advantage held b} r him, and to transfer that interest, or confer that or some equivalent benefit on the promisor, although the effect may be to discharge neither from an obligation, still it is a new, independent, and original contract between the parties, and is not within the Statute of Frauds required to be in writing." In Curtis v. Brown, 8 Shaw, C. J., states that "it is no sufficient ground to prevent the operation of the Statute of Frauds, that the plaintiff has relinquished an advantage, or given up a lien, in conse- quence of the defendant's promise, if that advantage has not also directly enured to the benefit of the defendant, so as in effect to make it a purchase by the defendant of the plaintiff. The cases in which it has been held otherwise are those where the plaintiff, in consideration of the promise, has relinquished some lien, benefit, or advantage for securing or recovering his debt, and where by means of such relinquish- ment the same interest or advantage has enured to the benefit of the defendant. In such cases, although the result is that the payment of the debt of the the third person is effected, it is so incidentally and indirectly, and the substance of the contract is the purchase, b}- the defendant of the plaintiff, of the lien, right, or benefit in question." It is equally true that it is no sufficient ground for taking the case out of the statute, that the defendant has received some benefit from the consideration of his promise. If this were so, then every promise to guarantee the debt of another, made upon a pecuniaiy consideration paid by the promisee to the promisor, would be taken out of the stat- ute. 4 In all cases, the question is, whether the promise is in substance 1 1 Saund. (6th ed.) 211, note. 2 1 Gray, 391, 396. s 5 Cush. 488. 4 " Suppose A owes B $100; B pays C $10, in consideration of which C verhally promises to guarantee the payment of the debt. There are numerous decisions, some of which were pronounced by judges of high authority, going far enough to sustain an action upon this promise; yet it is very plain that this is squarely prohibited by the statute." Per Hibbard, J., in Lang v. Henry, 54 N. H. 57, 61. " Suppose A delivers property to B, in consideration of his promise to become surety to him for the payment of a debt owing to him by C : the case is within the stat- ute, because B's obligation, although upon a consideration received by him, is that of a surety only that C shall perform." Per Grover, J., in Brown v. Weber, 38 N. Y. 187, 191. — Ed. SECT. I.J PRIME V. KOEIILER. 87 a promise to pay the debt of another, or whether it is a promise by the promisor to paj- his own debt, the extent of which is measured by the amount due by another. We think the authorities in this State have gone no further than to decide that a case is not within the statute, where, upon the whole transaction, the fair inference is, that the leading object or purpose and the effect of the transaction was the purchase or acquisition by the promisor from the promisee of some property, lien, or benefit which he did not before possess, but which enured to him by reason of his prom- ise, so that the debt for which he is liable may fairly be deemed to be a debt of his own, contracted in such purchase or acquisition. Nelson v. Boynton ; 1 Fish v. Thomas ; 2 Burr v. Wilcox ; 3 Furbish v. Goodnow ; Browne on St. of Frauds (3d ed.), § 214, c, d. Applying this test to the facts of this case, it is clear that the prom- ise of the defendant Ames was within the statute. It is true, or prob- able, that he indirectly received some benefit from the forbearance of the plaintiffs to attach the interest of the New York owners, but the purpose or effect of the transaction was not to transfer to him any lien or advantage. He acquired no rights which he did not before possess, and it is impossible to regard the promise as an original promise founded upon the consideration of a purchase by him. We are of opinion, therefore, that the jury should have been instructed in accord- ance with the request of the defendant Ames, that the plaintiff upon the facts found was not entitled to recover. Exceptions sustained.* D. W. PRIME and Another, Respondent, v. H. KOEHLER, Appellant. In the Court of Appeals, New York, April, 1879. [Reported in 11 New York Reports, 91.] Andrews, J. 5 The defendant upon the conveyance to him [by Koehler] did not assume the payment of the mortgage [executed by Koehler to plaintiff Prime]. The mortgage was a lien upon the land, and his grantor was personally liable upon his bond for the mortgage debt, but the defendant did not become personally bound to pay the mortgage. After the defendant had taken the conveyance, default was made in the payment of interest, and this default having continued for more than thirty days, the principal sum by the terms of the mortgage became due at the option of the mortgagees. The defendant thereupon verbally agreed with the mortgagees that if they would not exact pay 1 3 Met. 396. 2 5 Gray, 45. 3 13 Allen, 269. 4 Winn v. Hillyer, 43 Mo. Ap. 139, Contra. — Ed. 5 Only the opinion of the Court is given. — Ed. S8 PRIME V. KOEHLER. [CHAP. L ment of the principal, or foreclose the mortgage, and would give time for the payment of the interest then due, he would when the next instalment of interest became due, pay the interest then in arrear, together with that which should accrue to that time. The mortgagees assented to 'this arrangement, and took no proceedings to collect the mortgage debt or interest during the time specified in the agreement. This action is brought upon the defendant's promise to pay the two instalments of interest, and the only question is whether the under- taking on the part of the defendant was to answer for the debt, default, or miscarriage of another. If it is, not being in writing, it is void by statute. 2 Rev. Stat., 136, § 3. It does not admit of doubt that the forbearance of the plaintiff to take proceedings to foreclose the mortgage upon the request of the defendant was a good consideration for his promise to pay the interest. Addison on Contracts, 12; Parsons on Contracts, vol. 1, p. 443. But if the defendant's promise was to pay the debt of another, the fact that it is supported by a good consideration will not save it from the con- demnation of the statute. In addition, the promise must be in writing, and no matter what consideration exists, if the promise is collateral, a writing is the only competent evidence to establish it. Mallory v. Gillett. But the defendant's promise was not a promise to answer for the debt of another, within the meaning of the statute. When it was made, he had the legal title to, and possession of, the mortgaged prem- ises. The mortgage had been reduced several thousand dollars by pay- ments, and the defendant, by virtue of his ownership of the land, presumptively had an interest to protect it from sale on foreclosure. He was enabled by virtue of the agreement to take and control the rents and profits of the land during the time specified therein, and the plaintiffs meanwhile forbore to enforce their rights as mortgagees. The consideration of the defendant's promise was one running directly to> him from the promisees. The agreement was entered into by the de- fendant for his own benefit, for the purpose of protecting his interest in the property covered by the mortgage. It was an arrangement with the lienors, for delay in enforcing their lien on the defendant's land. The circumstances bring the case direct]}' within the third class of cases enumerated in Leonard y. Vredenburgh, 1 viz. : where the promise to pa}* the debt of another arises out of some new and original con- sideration of benefit or harm, running between the newly contracting parties. In this class of cases the subsisting liability of the original debtor is no objection to a recovery. And when the purpose of the promise is to secure a benefit to the promisor, b}' relieving his property from a lien, or securing and confirming his possession, the promise is original and not collateral, although a third person may be personally liable for the debt, and the promise may be in form a promise to pay such debt, and although the performance of the promise may result in 1 8 J. K. 28. SECT. I.] DAVIS V. PATKICK. 89 discharging the debt. Farle}' v. Cleveland, 4 Cow. 432 ; Mallory v* Gillett. The case of Mallory v. Gillett contains an able and elaborate review of the decisions upon the section of the statute we are now con- sidering, and the opinion of Comstock, C. J., recognizes and enforces the distinction between promises to pay the debt of another, entered into for the benefit of the original debtor, and in aid of the original contract, and promises which though in form promises to pay the debt of a thud person, are not made for the purpose of securing or perform- ing the original duty, but for the benefit of the promisor, although such security or performance may be the consequence. In a learned note in 1 Sand. 211 C, it is said : " Whether a case comes within the statute depends not on the consideration of the promise, but on the fact of the original party remaining liable, coupled with the absence of any liability on the part of the defendant, or his property, except such as arises from his express promise." We need not consider whether this state- ment of the doctrine is precisely accurate in all its parts, in view of the present state of the decisions, but it recognizes the validity of a verbal promise made under the circumstances of this case, and in that respect accords with the authorities before cited. We think the judgment is right, and it should therefore be affirmed* All concur. Judgment affirmed. 1 DAVIS v. PATRICK. In the Supreme Court, United States, November 9, 1891. [Reported in 141 United States Reports, 479.] The plaintiff having obtained a verdict and judgment, the defendant alleges error in regard to the second .count. That count is for the trans- portation of silver ore from the Flagstaff mine, in Utah Territory, to furnaces in Sandy, in the same territory. The relations between Davis and the Flagstaff Mining Company were disclosed by a written agreement, of date December 16, 1873. By that agreement it appeared that Davis, on June 12, 1873, had ad- vanced to the company £5,000, at the rate of six per cent, interest, a sum then due ; that it had sold to Davis and agreed to deliver at the ore-house of the company, free of cost, 5,195 tons of ore, of which it had only then delivered 200 tons, although Davis had paid in full for the entire amount. The agreement also recited that Davis was to advance an additional amount, if needed, not exceeding £10,000. It then provided that the mine should be put under the sole management of J. N. H. Patrick, to be worked and controlled by him until such time as the ore sold had been delivered and the sums borrowed had been 1 risk v. Reser, 19 Colo. 88, Accord. — En, 90 DAVIS V. PATRICK. [CHAP. L repaid, with interest. This control was irrevocable, save at the instance of Davis. Coupled with this agreement was a full power of attorney to Patrick. The trial proceeded upon the theory that during the time the services sued for were being rendered, Davis was the party mainly and pecuniarily interested in the working of the mine, and that he assumed to Patrick a personal responsibility for such services ; and the real question tried was whether Davis's promises were collateral undertakings to pay the debts of another, and void because not in writing. 1 Mr. Justice Brewer delivered the opinion of the Court. That Davis was interested in having the ore transported to the fur- naces is clear. He was interested in two respects : First, as to the 4,995 tons to be delivered to him at the ore-house, it being his property when thus delivered, any subsequent handling was wholly for his benefit ; and in respect to the balance, as the transportation was one step in the process of converting the product of the mine into money, it would help to pay the debt of the company to him. Davis, there- fore, was so pecuniarily interested in, and so much to be benefited by, the prompt and successful transportation of the ore, that any contract which he might enter into in reference to it was supported by abundant consideration. . . . 2 Were these promises binding upon Davis, or of no avail to the plaintiff because not in writing? Were it not for the Statute of Frauds there would be no question, for obviously there was both promise and consideration. Defendant relies upon that provision of the Statute of Frauds which forbids the maintenance of an action "to charge the defendant upon any special promise to answer for the debt, default, or miscarriage of another person, unless the agreement upon which such action shall be brought, or some memorandum or note thereof, shall be in writing," etc. The purpose of this provision was not to effectuate, but to prevent, wrong. It does not apply to promises in respect to debts created at the instance and for the benefit of the promisor, but only to those by which the debt of one party is sought to be charged upon and collected from another. The reason of the stat- ute is obvious, for in the one case if there be any conflict between the parties as to the exact terms of the promise, the courts can see that justice is done by charging against the promisor the reasonable value of that in respect to which the promise was made, while in the other case, and when a third party is the real debtor, and the party alone receiving benefit, it is impossible to solve the conflict of memory or testimony' in any manner certain to accomplish justice. There is also a temptation for a promisee, in a case where the real debtor has proved insolvent or unable to pay, to enlarge the scope of the promise, or to torture mere words of encouragement and confidence into an absolute "o v 1 The statement of the case has been slightly abridged. — Ed. 2 The Court here considered the evidence, finding it ample to prove repeated prom iSes by the defendant to pay for the transportation. — Ed. SECT. I.] DAVIS V. PATKICK. 91 promise ; and it is so obviously just that a promisor receiving no bene- fits should be bound only by the exact terms of his promise, that this statute requiring a memorandum in writing was enacted. Therefore, whenever the alleged promisor is an absolute stranger to the transac- tion, and without interest in it, courts strictly uphold the obligations of this statute. But cases sometimes arise in which, though a third party is the original obligor, the primary debtor, the promisor has a personal, immediate, and pecuniary interest in the transaction, and is therefore himself a party to be benefited by the performance of the promisee. In such cases the reason which underlies and which prompted this statutory provision fails, and the courts will give effect to the promise. As said by this Court in Emerson v. Slater : l " When- ever the main purpose and object of the promisor is not to answer for another, but to subserve some pecuniary or business purpose of his own, involving either a benefit to himself or damage to the other con- tracting party, his promise is not within the statute, although it may be in form a promise to pay the debt of another, and although the perform- ance of it may incidentally have the effect of extinguishing that lia- bility." To this may be added the observation of Browne, in his work on the Statute of Frauds, section 165: " The statute contemplates the mere promise of one man to be responsible for another, and cannot be interposed as a cover and shield against the actual obligations of the defendant himself." The thought is, that there is a marked difference between a promise which, without any interest in the subject-matter of the promise in the promisor, is purely collateral to the obligation of a third party, and that which, though operating upon the debt of a third party, is also and mainly for the benefit of the promisor. The case before us is in the latter category. While the original promisor was the mining company, and the undertaking was for its benefit, yet the performance of the contract ensured equally to the benefit of Davis and the mining company. Performance helped the mining company in the payment of its debt to Davis, and at the same time helped Davis to secure the payment of the mining company's debt to him ; and as the mining compan}' was apparently destitute of any other property, and the payment of its debt to Davis therefore depended upon the continued and successful working of this mine, and as the control and working of the mine had been put in the hands of Davis so that he might justly say, as he did, " I am practically the owner," it follows that he was a real, substantial part}' in interest in the performance of this contract. His promise was not one purely collateral to sustain the obligations of the mining compan}', but substantially a direct and personal one to ad- vance his own interests. While the mining company was ultimately to be benefited, Davis was primarily to be benefited by the transportation of the ore, for thereby that debt, which otherwise could not, would be paid to him. He, therefore, in any true sense of the term occupied not the position of a collateral undertaker, but that of an original prom- 1 22 How. 28, 43. 92 DAVIS V. PATEICK. [CHAF. \ isor, and it would be a shadow on justice if the administiation of the law relieved him from the burden of his promise on the ground that it also resulted to the benefit of the mining company, his debtor. Counsel for Davis place stress on the form of expression attributed by Patrick to Davis, to wit : " I will be personally responsible ; I will see you paid ; " and contends that the import of such language is that of a collateral promise. There is force in this contention, as it implies that some one else was also bound, but the real character of a promise does not depend altogether upon the form of expression, but largely on the situation of the parties ; and the question always is, what the par- ties mutually understood by the language, whether they understood it to be a collateral or a direct promise. Patrick declares he understood it to be a direct promise, and acted on the faith of it. That Davis under- stood it in the same way, is evidenced not only from the circumstances surrounding the parties at the time, but from the fact that in a subse- quent interview, when charged to have always promised to pay this debt, he admits that he believes that he did. The plaintiff, believing that Davis was, as he said, practicalby the owner, the party primarily to be benefited by the conversion of the products of the mine into money, understood that Davis was making an original promise to pay for the work which he might do, and upon such promise he might surely rely as an original promise, at least for an}' work done thereafter. The merits of the case, therefore, as disclosed hy the testimony were with Patrick, and the judgment in his favor was right. It is objected that the Court in its instructions spoke of Davis as an original prom- isor, as one promising to pay the debt, and not as one promising to be responsible for the debt, or to see it paid. But as Davis in the second conversation promised to pay, and in the third admitted that he had always promised to paj T the debt, we cannot think that the Court mis- interpreted the scope and effect of his words. It is not probable that the parties to this transaction understood the difference between an original and a collateral promise. We must interpret Davis's promises in the light of the surroundings, and of his subsequent admissions, and in that light we cannot think that the Court erred in its construction thereof; and if the jury believed that he had made such promises, we cannot doubt that the verdict should have been as it was. Affirmed. 1 1 See also Emerson v. Slater, 22 How. 43; Patton v. Mills, 21 Kas. 163; Winn v. Hillyer,43 Mo. Ap. 139 : Wills v. Cutler, 61 N. H. 405 ; Muller v. Riviere, 59 Tex. 640. In a few cases it has been held that a promise, in consideration that the plaintiff would work for or supply goods to the promisor, to pay both for the work or the goods, and also for work done or goods sold to A, is not within the Statute of Frauds. Clifford v. Luhring, 69 111. 401 ; Fitzgerald v. Morrissey, 14 Neb. 198; Mor- rissey v. Kinsey, 16 Neb. 17 (semble) ; Wills v. Cutler, 61 N. H. 405; Crawford v. Edison, 45 Oh. St. 239 ; Muller v. Riviere, 59 Tex. 640. But see contra, Andre v. Bod- man, 13 Md. 241 ; Gill v. Herrick, 1 1 1 Mass. 501 ; Ruppe v. Peterson, 67 Mich. 437. (But see McLaughlin v. Austin (Mich. 1895), 62 N. W. R. 719.) Belknap v. Bender 75 N. Y. 446 ; Birchall v. Neaster, 36 Oh. St. 331. — Ed. SECT. I.] KAABE V. SQUIER. 93 H. RAABE and Another v. A. C. SQUIER and Others. In the Court of Appeal, New York, December, 1895. [Reported in 148 New York Reports, 81.] HAionT, J. 1 The facts then as disclosed by the evidence are substantially as follows : Jencks and Stokes were the owners of the premises. Squier and Whipple were building the houses thereon for them, Squier and Whipple entered into a contract with the plaintiffs to furnish the woodwork for the houses for the sum of $20,000. The payments were to be made in instalments in cash, less ten per cent discount on the delivery of the material at the buildings. The contract specifically designated the material to be delivered upon each instal- ment. The plaintiffs prepared the first instalment of material, and delivered the same at the buildings, and then called upon the defend- ants, Squier and Whipple, for the first payment due them under the contract, but the same was delayed and not made for the space of about three months. The plaintiffs prepared and delivered the second instalment of material, and also demanded payment for that, which was neglected and delayed. The plaintiffs theu prepared the rest of the material called for by the contract, but refused to deliver the same until the instalments furnished by them had been paid for. Under these circumstances the defendants Jencks and Stokes saw the plaintiffs and told them that they were the owners of the buildings ; that they wauted them finished, and that if the plaintiffs would go ahead and deliver the rest of the material they would see them paid therefor ; that if Squier and Whipple did not pay, they would take it out of the amount going to them, and would pay the plaintiffs. It further appears that, relying upon this promise, the plaintiffs pro- ceeded and delivered all the material called for by the contracts, but that the sum of $2,800 still remains clue to them and unpaid. The referee dismissed the complaint as to Jencks and Stokes upon the ground, as he says, that their promise to pay, being oral, was void under the Statute of Frauds. As to the Statute of Frauds, it appears to us that its provisions have no application to the case under consideration. In the first place the indebtedness at the time the promise was made has been paid. The promise, in so far as it is here sought to be enforced, related to the indebtedness thereafter to be created. The promisors were the owners of the buildings in process of construction. The woodwork furnished by the plaintiffs was for their benefit. The contractors had neglected to pay the plaintiffs for the material furnished, and they refused to deliver more, as they had the right to do. Under such circumstances 1 Everything is omitted except so much of the opinion as relates to the liability of the defendants, Jencks and Stokes. — Ed. 94 WOOD V. BENSON. [CHAP. I the promise was made, and it was in reliance upon the promise that the plaintiffs delivered the rest of the woodwork. The promise thus made was original and founded upon a new consideration, that of the goods. It was beneficial, as we have seen, to the promisors, thus bringing the case within the rule stated by Finch, J., in White v. Ivintoul, 1 in which he says: " Where the primary debt subsists and was antecedently contracted, the promise to pay it is original when it is founded on a new consideration moving to the promisor and bene- ficial to him, and such that the promisor thereby comes under an independent duty of payment irrespective of the liability of the prin- cipal debtor." Ackley v. Parmenter; 2 Prime v. Koehler ; Bayles v. Wallace. 3 The judgment should be reversed and a new trial granted, costs to abide the event. All concur. Judgment reversed.* WOOD v. BENSON. In the Exchequer, Michaelmas Term, 1831. [Reported in 2 Crompton <$• Jerri*, 94.] Assumpsit by the clerk of the Manchester Gas Works, on the fol- lowing guaranty, signed by the defendant : — "I, the undersigned, do hereby engage to pay the directors of the Manchester Gas Works, or their collector, for all the gas which may be consumed in the Minor Theatre, and by the lamps outside the theatre, during the time It is occupied by my brother-in-law, Mr. Neville ; and I do also engage to pay for all arrears which may be now due. Witness my hand, this 10th day of August, 1830." There was a count for gas and goods sold and delivered. Plea, the general issue. At the trial, before Parke, J., at the last summer assizes for the county of Lancaster, it appeared that £13 15s. 6d. was due for arrears, and £15 4s. 6d. for gas supplied after the guaranty was given. It was objected that there was no consideration apparent on the face of the instrument for the promise to pay the arrears ; and that the agreement, therefore, being void as to part Under the Statute of Frauds, was void as to the whole. The learned judge directed the jury to find a verdict for the plaintiff for £29, and gave the defendant leave to move to enter a nonsuit. Joshua Evans accordingly obtained a rule to enter a nonsuit. Wightman showed cause. 5 i 108 N. Y. 222, 227. 2 98 N. Y. 425. 3 56 Hun, 428. 4 See contra, Rand v. Mather, 1 1 Cush. 1 ; Noyes v. Humphreys, 1 1 Grat. 636. — Ed. 5 The arguments of counsel are omitted, together with the concurring opinions of Bayley, Gakrow, and Holland, BB. — Ed. SECT. I.] WOOD V. BENSON. 95 Lord Lyndhurst, C. B. The case of Thomas v. Williams 1 may, as it appears to me, be supported. Part of the contract in that case was void by the Statute of Frauds. The declaration stated the entire con- tract, including that part of it which was void ; and therefore the contract, as stated in the declaration, was not proved. 2 The same observation applies to Lexington v. Clarke and Chater v. Beckett ; and I have no disposition to complain of those decisions, because in none of those cases does there appear to have been any count upon which the plaintiff could recover. But the question in the present case is widely different. The con- tract resolves itself into two parts. One is, "I engage to pay for all the gas which may be consumed," etc. ; that is a distinct engagement. The other part is, "and I do also engage to pay all arrears," etc. Now, this latter part cannot be sustained ; for if it be a distinct en- gagement, there is no consideration to support it expressed on the instrument. «. The question, then, is, if I undertake to pay for goods which may be supplied, though there is no promise to supply the goods, whether, when the goods are supplied, a right of action does not accrue to recover the amount. It is quite clear that it does. And though the latter part of the engagement cannot be sustained, under the first part of the engagement the plaintiff is entitled to recover for the gas subsequently supplied ; and therefore the verdict must stand for £15 4s. 6d. s Rule discharged as to entering a nonsuit, the verdict to be reduced to £15 4s. 6d. i 10 B. & C. 664. 2 The plaintiff declared specially on an oral promise to pay rent due from A and rent to become due from himself. Not being able to prove the entire promise, he failed altogether. The plaintiff was unsuccessful for the same reason in Lexington v. Clarke, 2 Vent. 223; Chater v. Beckett, 7 T. R. 201 ; Noyes v. Humphreys, 11 Grat. 636. — Ed. 3 In the course of the argument, Thomas v. Williams being cited in support of the objection of variance, Bayley, B., said : " In the present case the same objection would have applied on the first count of the declaration, and would have been fatal if there had not been a good count on which the subsequent supply could be recovered ; but the objection would have been on the ground that the plaintiff was bound to prove all the promise which he had stated, and not on the principle that if a promise be void in part it must necessarily be void in toto." In accordance with the principal case, see Band v. Mather, 11 Cush. 1 (overruling Loomis v. Newhall, 15 Pick. 159). Requisites of Memorandum. It was decided in Wain v. Warlters, 5 East, 10, that the memorandum of an agreement to answer for the debt, default, or miscarriage of another was insufficient, if it did not disclose the consideration for the promise as well as the promise itself. This strict, not to say narrow, interpretation of the statute continued to be followed, as in the principal case, until the passing of the statute 19 & 20 Vict. c. 97, by which the memorandum was to be deemed sufficient, even though the consideration for the promise did not appear in writiDg or by necessary inference from a written document. In this country the decisions are hopelessly irreconcilable, many following and many departing from the doctrine of Wain v. Warlters. The learned reader will find a full collection of the authorities in Browne, Statute -of Frauds (5th ed.) §§ 390, 391. — Ed. Ofi RANDALL V. RIGBY. [CHAP. L RANDALL v. RIGBY. In the Exchequer, Trinity Term, 1838. [Reported in 4 Meeson $• Welsby, 130.] The declaration stated that heretofore, to wit, on the 17th of October, 1837, in and by a certain indenture then made between the plaintiff of the first part, William Brookes of the second part, and Richard Hollins and the defendant of the third part, the counterpart of which, &c, certain land and premises were granted, bargained, sold, aliened, enfeoffed, and confirmed unto the said Richard Hollins and the defend- ant, their heirs and assigns, to hold the same unto the said Richard Hollins and the defendant, and their heirs, to the use, intent, and pur- pose that the plaintiff, his heirs and assigns forever, should and might, out of the said land und dwelling-houses, and other buildings erected thereupon, with the appurtenances, receive and take one clear yearly rent or sum of £63 of lawful money of Great Britain, to be payable half-yearly, free from all deductions whatsoever ; and to the further uses, intents, and purposes in the said indenture mentioned ; and the said defendant did by the said indenture, for himself and his heirs, executors, administrators, and assigns, covenant, promise, aud agree with and to the plaintiff, his heirs and assigns, that they, the said Richard Hollins and the defendant, their heirs, executors, administra- tors, and assigns, or some or one of them, should or would forever thereafter well and truly pay or cause to be paid unto the plaintiff, his heirs and assigns, the said yearly rent of £63 by the said indenture limited in use to him or them, on the days and times thereinbefore appointed for payment thereof, and hereinbefore mentioned, without any deduction or abatement whatsoever ; and the plaintiff saith, that after the making of the said indenture, to wit, on the 25th of March. 1838, which day elapsed before the commencement of this suit, a large sum of the yearly sum or rent aforesaid, to wit, £31 106*. became due to the plaintiff, according to the said covenant aforesaid, for one-half of a year ending on the day and year last aforesaid and then last elapsed ; and the plaintiff further saith, that the said Richard Hollins was then and thence to the commencement of this suit alive. Breach, that neither Hollins nor the defendant paid, but therein made default, contrary to the said covenant of the said defendant, whereby an action hath accrued to demand the sum of £31 10s. General demurrer, and joinder. The cause of demurrer stated in the margin by the defendant was, that according to the authorities, debt will not lie for the arrears of a rent or annuity in fee. Wightman, in support of the demurrer. Taking the whole indenture together, this is the grant of an annuity payable out of land ; the covenant is a mere collateral security ; and the general principle estab- SECT. I.] RANDALL V. KIGBY. 97 lished by Webb v. Jiggs 1 was, that at common law debt does not lie for the arrears of an annuity payable out of lands for life or a greater estate, while the estate of freehold continues. [Lord Abinger, C. B. The annuity is charged on land in the hands of one person, and another person covenants to pay. The terre-tenant ought therefore to pay the annuity in the first instance, and the covenantor is not liable unless he refuses ; that is not a debt, but only a duty on failure of payment by the terre-tenant.] Covenant might possibly lie against the defendant, but not debt ; his covenant is merely collateral. Crompton, contra. This is a collateral covenant in gross, on which an action may be maintained without reference to privity of estate. [Parke, B. — How do you distinguish this from the case of a lease, with a covenant by the lessor, his executors, administrators, and assigns, to pay the rent, and the lessee assigning, and the lessor accepting the assignee as his tenant? — the cases are clear that the lessor, or the assignee of the reversion, may bring debt against the assignee on the privity of estate, but can only bring covenant against the lessee, because the privity of estate is determined as to him, and the covenant becomes collateral : 1 Siderf. 402 ; Mills v. Auriol. 2 ] Those are cases where the question arose how far debt will lie when the previous privity of estate has determined ; this is a mere express covenant between strangers, which in its inception was collateral, and never had anything to do with the estate. Wightman, in reply. Cooke v. Herle 3 is an express authority that the covenant is collateral. The effect of it is, " I, the defendant, will take care that this annuity, which issues out of land, shall be paid." If it had been merely a covenant by both these parties to pay a sum in gross, debt might have lain, although it was intended to secure the annuity ; but it is a covenant to pay the annuity, which issues out of land. The primary duty is not that the defendant shall pay in the first instance ; his duty is to take care that it is paid out of the land. But the first principle in an action of debt is, that there must be a direct duty to pay. 4 Lord Abinger, C. B. I think Mr. Wightman has drawn the true distinction. The question here is not whether the defendant is liable, but whether he is liable in this form of action. If it had appeared that this was a debt of his own, on which he was liable to the plaintiff, debt might be maintainable as well as covenant ; but it is an action on a' mere collateral covenant, by which the defendant, jointly with another, undertakes to secure the payment of an annuity which is issu- ing out of land. The case of a lessee who has assigned his lease is strictly analogous. In Mills v. Auriol, Wilson, J., sums up the posi- tion of a lessee under such circumstances in these words : " An action of covenant remains after the estate is gone ; but, generally speaking, when the land is gone, the action of debt is also gone, debt being 1 4 M. & Selw. 114. 2 2 H. Bl. 433. 3 o Mod. 138. 4 The arguments of counsel are somewhat abridged. — Ed. 98 RANDALL V. RIGBY. . [CHAP. I. maintainable because the land is debtor. Covenant is founded on a privity collateral to the land." The same point had been decided in Thursby v. Plant. 1 The defendant here stands in the same relation to the plaintiff as the original lessee after assignment of the estate, when he is only suable in covenant, not in debt. Parke, B. 1 am of the same opinion. No doubt this covenant is collateral or in gross in one sense, that it does not run with the land or rent ; for that Millies v. Branch 2 is an authority ; but it is also col- lateral in the sense contended for by Mr. Wightman, that it is not a covenant to perform any direct duty, but only a collateral one to secure payment of the rent. Upon this undertaking an action of covenant is the proper remedy ; in which the plaintiff will recover, by way of dam- ages, the amount actually in arrear. The case falls therefore within the principle of the authority referred to in Viner's Abridgment, and ranges itself also with that of the lessor and lessee after assignment of the estate, as decided in Thursby v. Plant, and in Mills v. Auriol. This covenant is collateral in that sense also, and is not like a cove- nant to pay a sum of money, which becomes a direct duty from the defendant to the plaintiff. Bolland and Anderson, BB., concurred. Judgment for the defendant. 1 1 Siderf. 401 ; s. c. 1 Saund. 230; and see p. 241, n. 5. 2 5 M. & Sel. 411. SECT. II.] SISON V. KIDMAN. 99 SECTION II. Suretyship in the Form of an Independent or Absolute Undertaking. SISON v. KIDMAN. In the Common Pleas, January 26, 1842. [Reported in 11 Law Journal Reports, Common Pleas, 100. 1 ] The plaintiff declared in debt against the defendant, as maker of a promissory note for £15, payable to the plaintiff or order, value received. Plea : that the defendant was charged in the declaration as the prin- cipal and single party to the note, but that the note was the joint and several note of the defendant and one Watts, and that the defendant signed the note together with Watts, to secure a sum of money, which was and still is the proper debt of Watts, and that no part whatever of the said debt was the proper debt of the defendant, and that there was no consideration for the note as between the plaintiff and defendant. Replication : that there was a sufficient consideration for the making of the said note by the defendant. Demurrer and joinder. This case was argued by — Stephens, Sergt. , in support of the demurrer. The question as raised in the pleadings is whether debt will lie in this case. The plea discloses facts which show that there was no consideration between these parties : there was, therefore, no privity between them. The contract was collateral. [Erskine, J. On the face of the note, one maker is liable as much as the other.] That may be so ; but the plea discloses the real nature of the trans- action. The defendant is not liable till Watts has first made default ; and therefore, though assumpsit might be maintained, debt will not lie. It was open to the defendant to show the effect and nature of the consideration in the plea. Foster v. Jolly ; 2 Clarke v. Wilson ; 3 Abbott v. Hendricks. 4 [Maule, J. How can you call the liability on the note a collateral liability?] Because the original debt was due from another party. 1 3 M. & Gr. 810, s. c — Ed. 2 1 Cr. M. & E. 703. 3 3 Mee. & Wels. 208. * 1 Man. & Gr. 791. '.90 SISON V. KIDMAN. [CHAP. I. [Maule, J. Suppose the defendant had been the sole maker of the lote, could you go into the nature and origin of the consideration?] It is shown that another party was primarily liable upon it. [Tindal, C. J. Suppose the action had been assumpsit, would it have been any defence to show that the other party had not been sued upon it? If not, it cannot be considered as a mere guarantee.] In Milton's Case, 1 which was cited and relied on in the judgment in Priddy v. Henbrey,' 2 it was decided that debt did not lie by the payee against the acceptor of a bill of exchange, drawn by a third person, on the ground that he that drew the bill continued the debtor ; and that there was, therefore, no privity between the payee and acceptor. Here Watts continued the debtor. [Erskine, J. But here you have a direct contract between the plaintiff and defendant, on the face of the note.] So there is between the payee and acceptor of a "bill of exchange. [Tindal, C. J. Not an original contract.] In Randall v. Rigby, lands were enfeoffed to A. B., to the use that the plaintiff and his heirs should receive and take out of them a yearly rent of £63, and the defendant covenanted with the plaintiff that A. B. should pay the said yearly rent on the days and times agreed on ; and it was held that debt would not lie by the plaintiff against the defend- ant for the arrears of the rent. [Maule, J. In that case, the defendant was only to pay in default of another party. I think this case is more like that of Evans v. Jones. 3 ] The case in Siderfin, p. 402, referred to by Parke, B., in Randall v. Rigby, and also the cases of Browne v. London, 4 and Bishop v. Young, 5 are authorities in favor of the objection. [Tindal, C. J. When the defendant became a party as maker to a promissory note in favor of the plaintiff, he entered into an imme- diate contract, which raised a privity between the plaintiff and himself, or, in other words, he took the debt on himself. I see no ground whatever for holding that debt will not lie in this case; and I think that a good consideration is shown, even on the face of the plea. The rest of the Court concurring, Judgment for the plaintiff. i Hard. 485. 2 1 B. & C. 675. 8 5 Mee. & Wels. 295. 4 1 Vent. 152. * 2 B. & P. 78. SECT. II.] MACDOUGALL V. FOYER, 101 CATHERINE MACDOUGALL v. DAVID FOYER. In the Court of Session, Scotland, February 13, 1810. [Reported in 15 Faculty Decisions, 57'.).] Malcolm Macfarlane being indebted to Catherine Macdougall, his mother, he and John Mitchell and David Foyer subscribed a bill in the following terms : — Garncaber, 3d January, 1805. £. 1300 Principal. 65 Interest. £. 1365. Jointly and severally against the term of Martinmas first to come, at Messrs. Carrick and Company's banking-office in Glasgow, pay to me, Catherine Macdougall, widow of the deceased Donald Morison, or order, thirteen hundred and sixty-five pounds Sterling, value of her Catherine X Macdougall. mark. To Messrs. Macfarlane in Carncaber, and John Mitchell in Arrochy- more, acceptants. (Sigued) Malcolm Macfarlane. John Mitchell. (Signed) David Foyer in Blairvocke. David Foyer as cautioner for them. Upon the death of Malcolm Macfarlane, the pursuer brought an action against his son George and the other acceptors, concluding that they should be ordained jointly and severally to make payment of the debt. Mitchell and Foyer resisted payment of the bill. Mitchell's case was very untenable, and not much insisted in. For Foyer it was pleaded that an acceptance of a bill of exchange may be either abso- lute or conditional, partial or entire. Chitty on Bills, pp. 135-139 ; Kidd on Bills, pp. 74-78 ; Douglas, p. 286. That the bill was not addressed to him conjunctly and severally with the others : that he had written that part of the address himself, and had subscribed his acceptance expressly as cautioner : that the bill subscribed with that qualification had been received by the pursuer without any hesitation or difficulty, though she was quite entitled to have objected : that she must therefore be held to have looked on him as subsidiarie liable : and that therefore he was entitled to the beneficium ordinis, and had a right to insist on George Macfarlane being discussed before recourse could be had upon him. The pursuer founded chiefly on the case of Sharpe against Harvey, 24th June, 1808 ; and pleaded that the decision there showed that, 102 CASEY V. BKABASON. [CHAP. I. quoad the creditor, a cautionary obligation could not be constituted at all by a bill, otherwise it must have been subject to the septennial pre- scription. She farther argued that the acceptance in this case was totally different from a conditional one ; for there the creditor's right depended upon an event which might or might not happen ; whereas here there was no doubt about the matter. It was not conditional, but merely cautionary, and would of course be of use in settling questions of relief among the co-obligants, but could have no effect upon the creditor. in the bill. The Lord Ordinary (25th November, 1808) decerned against the whole defenders conjunctly and severally. After some farther procedure, the case came before the Court on petition and answers. The judges were clearly of opinion that cau- tionary obligations in bills of exchange could have no other effect than that of settling the question of relief, and on that ground (23d Janu- ary, 1810) they adhered. A reclaiming petition was (23d February, 1810) refused without answers. 1 CASEY v. BRABASON. In the Supreme Court, New York, Special Term, April, 1860. [Reported in 10 Abbott's Practice Reports, 368.] Motion for a new trial. This action was brought upon a promissory note, in the words and figures following, to wit : — "$200. " On or before two years, we jointly and severally promise to pay to Michael Casey, or his order, the sum of two hundred dollars. Given under our hands, " January 8, 1856. (Signed) "Bernard McCabe, ' ' Catholic .Pastor. " Charles J. Brabason." The defendant alleged in his answer that he signed the note as surety, and without consideration. 1 " With the nature of a bill, a cautionary obligation is altogether incompatible ; and in a question with the drawer or creditor, there can be no cautioner. A party- subscribing incurs a joint and several obligation, and is not entitled to the benefit of discussion. The law, therefore, by which cautionary obligations are governed, totally fails in its application to such a case ; neither is any injustice committed against the acceptor, because every one voluntarily subscribing either a bill or any other obliga- tion, is presumed to know the legal consequences of the obligation which he ha& undertaken." By the Court in Sharp v. Henry, 2 Mor. Diet. Dec. Bill of Exchange, Appendix, No. 22. — Ed. SECT. II.] CASEY V. BRABASON. 103 The proof showed that the note was given for a debt of McCabe's, and that the defendant signed it as his surety, without receiving any consideration therefor. The defendant insisted that he was not liable ; but the judge held otherwise, and directed the jury to find for the plaintiff", to which decision and direction the defendant excepted. The jury rendered a verdict in favor of the plaintiff for $229.10. The action was tried at the Chenango Circuit in February, 1860. Defendant moved for a new trial on a case and exceptions. The other points in the case need not be stated, as they were not deemed of sufficient importance for examination. William H. Hyde, for plaintiff. Horace Packer, for defendant. Balcom, J. The instrument in question is a valid promissory note ; although it does not contain the words "for value received," or any words tantamount to them. Edwards on Bills and Promissory Notes, 50, 78; 1 Cow. 2d ed. 1G3. The defendant's counsel does not deny but that McCabe was liable on the note ; but he contends that the defendant is not liable on it, because he signed it as surety, and did not receive any consideration therefor. He insists that the Statute of Frauds applies to the case, and exempts the defendant from the payment of the note. The statute is that " every special promise to answer for the debt, default, or mis- carriage of another" shall be void, unless the agreement containing such promise, or some note or memorandum thereof expressing the consideration, be in writing and subscribed by the party to be charged therewith. 2 Rev. Stat. 135, § 2. McCabe owed the plaintiff the money mentioned in the note ; and the defendant, though in fact a mere surety, signed the note as princi- pal, with McCabe. The note, therefore, was not a special promise by the defendant to answer for the debt, default, or miscarriage of McCabe. I think the debt, for which the note was given, a sufficient consid- eration to uphold the note against the defendant as well as McCabe. The note, on its face, is an original undertaking of both of them. If the defendant had indorsed the note for the accommodation of McCabe, instead of signing it as maker, he would clearly have been liable on it, if it had been duly protested for non-payment ; 1 and I am unable to see why he is not liable on it as maker. 1 Steele v. McKinlay, 5 App Cas. 754, 770 (semb/e) ; Macdonald v. Union Bank, Court Sess. Cas. 3d Series, vol. 2, p. 963 ; Spann v. Baltzell, 1 Fla. 301 ; Turnbull v. Trout, 1 Hall, 336 ; Zellweger v. Caffe, 5 Duer, 87 ; Nelson v. Richardson, 4 Sneed, 307, Accord. Crooks v. Tully, 50 Cal. 264, Contra. If an indorser, knowing that he is discharged by the holder's failure to make due presentment or give due notice of dishonor, promises orally to pay the bill or note, his promise is not within the Statute of Frauds, being regarded not as a contract, but as a renunciation of a defence. See Uhler v. Farmers' Bank, 64 Pa. 406, and 1 Ames, 10-4 MANLEY V. GEAGAN. [CHAP. I. I am of the opinion that the Statute of Frauds does not apply to the case, and that the jury were properly directed to find a verdict in favor of the plaintiff for the amount of the note. The point that the defendant supposed he was only signing his name to the note as a witness when he wrote it is untenable ; for his answer concedes he signed it as surety. I think there was no question for the jury upon the evidence; and that the defendant's motion for a new trial should be denied, with costs. 1 M. R. P. MANLEY, Administratrix, v. N. T. GEAGAN In the Supreme Judicial Court, Massachusetts, October Term, 1870. [Reported in 105 Massachusetts Reports, 445.] Contract by the administratrix of Edwin Manley upon an oral promise to pay the following order: "Fall River, October 9, 1868. Nicholas T. Geagan, Sir : Please pay to Edwin Manley thirteen hundred and fifty-four dollars for work on your house, corner of Bedford and Twelfth Streets, and charge the same to account of "H. B. Borden & Co." The answer denied all the plaintiff's allegations, and pleaded want of consideration, and the Statute of Frauds. The trial was in the Superior Court, without a jury, before Pitman, J., who made the following report of the case for the determination of this Court : — "The plaintiff proved that her intestate, in whose favor the ordei was drawn, did work as a stone-mason on a block of buildings belong- ing to the defendant, and which he was then erecting, prior to the time of drawing this order. It appeared that the whole contract was taken by H. B. Borden & Co., who employed the plaintiff's intestate to do the mason-work, and that there was no contract between the plaintiff's intestate and the defendant, and no employment by the defendant ; that after the work was done the defendant sent word to the plaintiff's intestate to get an order from Borden & Co. on him ; adding, ' I am going to pay all off on the 10th, and am not going to trust Borden & Co. to pay it ; I am going to see the help all paid ; ' and that this was Cases on Bills and Notes, 506. But see contra, Peabody v. Harvey, 4 Conn. 119, and Huntington v. Harvey, 4 Conn. 724. By statute, in some jurisdictions, the waiver must be in writing. Thomas v. Mayo, 56 Me. 40. — Ed. 1 Davidson v. Rothschild, 49 Ala. 104; Lehman v. Levy, 69 Ala. 48; McGill v. Dowdle, 33 Ark. 311 ; Nichols Co. v. Dedrick (Minn. 1895), 63 N. W. R. 1110; Freeh v. Yauger, 47 N. J. 157 ; Paul v. Stackhouse, 38 Pa. 302, Accord. — Ed. SECT. II.] MANLEY V. GEAGAN. 105 communicated to the intestate ; that the next clay he procured the order in suit and presented it to the defendant ; that the defendant took it, read it, said it was all right, and that he would accept it, and pay it on Monday ; that on Monday he could not be found, was gone out of town for a week, and has since refused to pay it. The defend- ant, who was called as a witness by the plaintiff, testified that he owed H. B. Borden & Co. nothing at the time when this order was presented ; and I find as a fact that it is not proved that he actually did owe them anything. The defendant offered no evidence. " Upon the above, the Court ruled that the promise of the defendant, being an oral promise to pay the debt of another, and being also with- out any consideration, no action could be maintained on it, and there- upon found for the defendant. If this ruling is wrong, a new trial is to be had; otherwise, judgment on the verdict." J. C. Blaisclell, for the plaintiff. J. M. Morton., Jr., for the defendant. 1 Gray, J. The promise of the defendant was to pay for work already done by the intestate for Borden & Company, without any previous contract with or employment by the defendant. The defend- ant owed Borden & Company nothing, and received no consideration, either from Boi'den & Company or from the intestate for his promise. The intestate neither did any work nor paid any money upon the faith of this promise, nor gave up any right or security against Borden & Company. Their original liability to him was not altered or affected by the defendant's promise. This promise was therefore clearly a promise to answer for the debt of another, and, not being in writing, was within the Statute of Frauds. Gen. Sts. c. 105, § 1, el. 2 ; Stone v. Symmes; 2 Curtis v. Brown; 3 Furbish v. Goodnow ; Browne on St. of Frauds, §§ 172-174. Judgment on the verdict for the defendant} 1 The arguments of counsel are omitted. — Ed. 2 18 Pick. 467. 3 5 Cush. 488. 4 Morse v. Massachusetts Bank, Holmes C. C. 209, 214 (semble) ; Walton v. Mande ville, 56 Iowa, 597, Accord. 106 JARVIS V. WILSON. [CHAP. 1 JOSEPH JARVIS v. ALLYN M. WILSON. In the Supreme Court of Errors, Connecticut, May, 1878. [Reported in 46 Connecticut Rejiorts, 90.] Loomis, J. 1 On the 8th of July, 1874, one William Murphy owed the plaintiff $189.20, and drew his order on the defendant in favor of the plaintiff in writing as follows : — " Mr. A. M. Wilson. Please pay Joseph Jarvis one hundred and eighty-nine dollars and twenty cents, and charge the same to me. "William Murphy." Murphy, who was then and had been for some time in the employ of the defendant, had been authorized by the latter to draw orders in favor of his workmen, of whom the defendant knew the plaintiff to be one. The above order was duly presented for acceptance to the defendant on the same day that it was given, and the defendant said it was good, and verbally promised to pay it. It afterwards appeared that there was in fact due from the defendant to the drawer only $144.94, and thereupon the defendant refused to pay the plaintiff as he had before agreed. The Court below upon these facts held the defendant liable for the full amount of the order. We think the judgment must stand against all the objections urged iu behalf of the defendant. The Statute of Frauds does not apply to such an undertaking. One reason may be that the acceptor is regarded as the primary debtor, and his acceptance is an undertaking not merely to pay a debt due from the drawer to the payee, but to pay his own debt to the drawer. But in this case the defendant relies on the fact that when he accepted the bill he had not in his hands sufficient funds of the drawer to pay the amount required, and contends that the acceptance should therefore either be considered within the statute, or should be held void for want of consideration. This objection ignores the fundamental prin- ciple that the acceptance admits everything essential to the validity of the bill, and that want or failure of consideration cannot be shown in a suit by the payee against the acceptor. The presumption is that every bill of exchange is drawn on account of some indebtedness from the drawee to the drawer, and that the acceptance is an appropriation of the funds of the latter in the hands of the former. The rule of law is not unjust that prevents the acceptor from showing as a defence against a suit by the payee a want of funds of the drawer in his hands, for it was his duty to ascertain before he accepted the bill whether he 1 Everything is omitted except the opinion of the Court relating to the Statute of Frauds. The Court decided that the instrument in question was a bill of exchange, and that an oral acceptance was valid. — Ed. SECT. II. S JARVIS V. WILSON. 307 owed the drawer that amount. This was exclusively within his knowl- edge ; but the plaintiff had no means of knowing how the fact was, and he had a right to assume that the defendant would not accept the bill unless he had funds of the drawer sufficient to make good the acceptance. Fisher v. Beckwith ; 1 Arnold v. Sprague ; J United States v. Bank of Metropolis ; 3 Grant v. Ellicott ; 4 Hoffman v. Bank of Mil- waukee ; 5 Parsons on Notes and Bills, 323 ; 1 Daniels on Negotiable Instruments, 135. There is no error in the judgment complained of. In this opinion the other judges concurred. 6 i 19 Vt. 31. 2 34 Id. 402. 3 15 Pet. 377. 4 7 Wend. 227. 6 12 Wall. 181. 6 Wynne v. Raikes, 5 East, 174; Laflin Co. v. Sinsheimer, 48 Md. 411 (in which cases the accommodation acceptance was in writing, but in an extrinsic document) ; Latlin v. Sinsheimer, 48 Md. 411 ; O'Donuell v. Smith, 2 E. D. Smith, 124 (in which ?ases the accommodation acceptance was written on the bill), Accord. But see contra to the last two cases cited, Dunbar v. Smith, 66 Ala. 490. An oral acceptance for value, it is everywhere agreed, is not affected by the section of the Statute of Frauds relating to guaranties. Shields v. Middleton, 2 Cranch, C. C. 205 ; Espalla v. W r ilson, 86 Ala. 487 ; Nelson v. First Bank, 48 111. 36 ; Louisville Co. v. Coldwell, 98 Ind. 245; Spurgeon v. Swain (Indiana, C. A., 1895), 41 N. E. R. 397; McCutchen v. Rice, 56 Miss. 455; Lavell v. Frost (Montana, 1895), 40 Pac. R. 146; Leonard v. Mason, 1 Wend. 522 ; Spaulding v. Andrews, 48 Pa. 411 ; Dull v. Bricker, 76 Pa. 255; Strohecker v. Cohen, 1 Speers, 349 (semble) ; Neumann v. Shroeder, 71 Tex. 81 ; Fisher v. Beckwith, 19 Vt. 31 ; In re Goddard, 66 Vt. 415. In jurisdictions where by statute the acceptance of a bill must he in writing, a drawer who, on presentment, promises the holder to pay the bill incurs no liability whatever. He is not liable as acceptor for want of a writing, nor as a simple contract promisor for want of a consideration for the promise. Anderson v. Jones, 102 Ala. 437; Pfaff v. Cummings, 67 Mich. 143; Overman v. Hoboken Bank, 30 N.J. 61; Weinhauer c. Morrison, 49 Hun, 498. A recognizance is not within the Statute of Frauds relating to guaranties. Gay v. State, 7 Kas. 394. Aval or Anomalous Indorsement. If one who is not the holder writes his name on the back of a bill or note, his true liability by the custom of merchants is that of an aval, and should not be affected by the Statute of Frauds, any more than the signature of any other party to a bill or note. But, unfortunately, the courts have not given effect to this custom, some treating such a party as a co-maker, others as a second indorser, and others as a guarantor. Where he is regarded as a co-maker or iudorser, the Statute of Frauds is held to be inapplicable. Drake v. Markle, 21 Ind. 433 ; Kealing v. Van Sickle, 74 Ind. 529 ; Chaddock v. Vanness, 35 N. J. 517. Where he is regarded as a guarantor, the authorities are divided. The guaranty is not within the Statute of Frauds according to Beckwith v. Angell, 6 Conn. 315; Stowell v. Ray- mond, 83 111. 120; Peterson ». Russell (Minn., 1895), 64 N. W. R. 555. A contrary view was taken in Drake v. Markle, 21 Ind. 433 (semble) ; Culbertson v. Smith, 52 Md. 628; Hayden v. Weldon, 43 N. J. 128; Shafer v. Farmers, 59 Pa. 144; Hauber v. Patterson, 84 Pa. 274; Allwine v. Garberich, 2 Pears. 28; Temple v. Baker, 125 Pa. 634. — Ed. -V-^* ? ■•«<■*■ i u> J 08 KIMBALL y. NEWELL. [CHAP. IL CHAPTER II. SURETY'S DEFENCES AGAINST THE CREDITOR. i— »— r ^t/ ) £_ • SECTION I. £7 Defences based on the Absence of any Liability of the Principal Debtor to the Creditor. 'C* f • KIMBALL v. NEWELL. In the Supreme Court, New York, January, 1845. [Reported in 7 Hill, 116.] On error from the Superior Court of the city of New York. Newell brought an action of covenant against Kimball in the marine court of the city of New York, claiming to recover certain rent due on a lease to one Theodosia Knowlton, for whom the defendant had become surety. On the trial, the plaintiff gave in evidence the following instruments : " This is to certif} T that I have hired and taken from Daniel Newell the house in Nassau-street, &c, for one year, to commence on the first day of Ma) - next, at the yearly rent of four hundred and fifty dollars, payable quarterly. And I do hereby promise to make punctual pay- ment of the rent, in manner aforesaid, and quit and surrender the premises, at the expiration of the term, in as good state and condition as reasonable use and wear thereof will permit, damages by the ele- ments excepted. Given under my hand and seal the 3d day of March, 1840. Mrs. T. Knowlton. [l. s.] " In consideration of the letting of the premises above described, and for the sum of one dollar, I hereb}' become surety for the punctual payment of the rent, and performance of the covenants, in the above written agreement mentioned, to be paid and performed by Mrs. Theodosia Knowlton, and if an}* default should be made therein, I do hereby promise and agree to pay unto the said Daniel Newell such sum or sums of money as will be sufficient to make up such deficiency, and fully satisfy the conditions of the said agreement, without requir- ing any notice of non-payment, or proof of demand being made. Given under my hand and seal the 3d day of March, 1840. "M. T. C. Kimball, [l. s.J" SECT. I.] KIMBALL V. NEWELL. 109 It appeared that Mrs. Knowlton occupied under the lease, and that a balance of rent, amounting to $31.94, remained due the plaintiff. ^It. fu rther appeared that Mrs. Knowlton was a married woman at the time the lease was executed ; and the defendant contended that, inasnTuch as her covenant was void D}' reason of coverture, his was also'v oid. The Marine Uourt held otherwise, however, and rendered judgment in favor of the plaintiff, which was afterwards affirmed by the Superior Court on certiorari, and the defendant brought error. II. H. Shannon, for the plaintiff in error. Howard & Onderdonk, for the defendant in error. Nelson, C. J. The defendant having consented to become bound as surety for the rent of the premises leased to Mrs. Knowlton, it is but reasonable to presume that, if he was not well acquainted with her situation before, he then made some inquiries into her circumstances and condition, and thus became fully possessed of the facts which he now sets up as a ground of discharge. But conceding that the defendant had no knowledge of the social condition of Mrs. Knowlton, and that he supposed she would be legally holden for the rent as it accrued, I am still of the opinion that he is liable on his contract. The doctrine for which his counsel contends is thus stated by Theobald: " The obligation of the suret} - being acces- sory to the obligation of some person who is the principal debtor, it is of its essence that there should be a valid obligation of a principal debtor. The nullity of the principal obligation necessarily induces the nullity of the accessory." Theob. Prin. & Sur. 2. This is undoubtedly correct as a general rule ; but it has its exceptions, and the case before us is one of them. Mr. Chitty says : " The rule that a party cannot be liable upon a con- tract of guarant} T , unless the principal has incurred a legal responsibilitj', is true, in some instances, in form or words, rather than in substance.'* Chitty on C'ontr. 499. He adds: "In the case of a guaranty to an- swer for the price of goods to be supplied to a married woman, or goods (not necessaries) to be sold to an infant, or other persons in- competent to contract, no doubt the party guaranteeing, though profes- sedly contracting only in the character of surety, would be responsible. ' T Id. He refers to the case of Maggs v. Ames, 1 which was an action against the defendant as surety for a married woman. There the ques- tion was whether the undertaking of the defendant was an original one, so as not to require it to be in writing. The Court held that it was collateral, and therefore should have been in writing. But neither the counsel nor Court supposed that the defendant would not have been bound, if the contract had been in writing. On the contrary, that was assumed. In the case of White v. Cuyler,' 2 it was impliedly at least conceded by Lord Kenyon, that a guarantor or surety for a, feme covert would be liable on his contract. See also Chitty on Contr. 515 ; Pit- 1 4 Bing. 470. ■'■ 6 T. R. 176. 110 KIMBALL V. NEWELL. [CHAP. II. man on Prin. & Suret}', 13 ; Buekrnyr v. Darnall ; Harris v. Hunch- back ; J Chapin v. Lapham. 2 <~s The doctrine of the civil law is very clear and satisfactory on this brfjP ^SLw^subject. It is as follows: " Although the obligation of a surety be only an accessory to that of the principal debtor, yet he who has bound ^/ * > *"^Jiiinself suret}" for a person who may get himself relieved from his /y obligation, such as a min\>r, or a prodigal who is interdicted, is not ^ t *^^—' discharged from his suretyship by the restitution of the principal debtor : and the obligation subsists in his person ; unless the resti- tution were grounded upon some fraud, or other vice which would have the effect to annul the right of the creditor." Dom. B. 3, tit. 4, § 1, art. 10, Strahan's ed. Again : " If the principal obligation was an- nulled only because of some personal exception which the principal debtor had, as if it was a minor, who, in consideration of his being under age, got himself relieved from an engagement by which he suf- fered some prejudice, and that there had been no fraud on the creditor's part ; the restitution of the minor would have indeed this effect, that it would annul his obligation to the creditor, and his engagement to save harmless his suret}', if he desired to be relieved from it. But the said restitution of the minor would not in the least invalidate the surety's obligation to the creditor. For it was only to make good the obligation of the minor, in case he should be relieved from it on ac- count of his age, that the creditor took the additional security of a surety." Id., B. 3, tit. 4, § 5, art. 2 ; and see 1 Ev. Poth. On Obi. 237. I am satisfied that the decision of the Court below was right, and that the judgment should be affirmed. Beardsley, J. I think the defendant was estopped from denying the competency of Mrs. Knowlton to bind herself by the covenant she assumed to execute. The defendant by his covenant admits she was thus bound, and he shall not be allowed to gainsa}- it by alleging her incapacit}' to make a legal contract. Had she been induced to enter into this engagement l\y fraud or imposition, or upon a usurious con- sideration, the case might have been otherwise; but the defendant, although a surety, cannot be permitted, on the ground now set up, to deny the legal existence of a covenant which is explicitly conceded by his own deed. Co. Litt. 352 a, note 306 ; 1 Stark. Ev. 302, Am. ed. of 1830 ; Greenl. Ev. §§ 22 to 26, and the notes. The judgment of the Court below is right, and should be affirmed. J 1 1 dgn lent affirm i ed. 3 i 1 Burr. 373. 2 20 Pick. 467. 3 Nabbr. Kountz, 17 Md. 283 ; Weare v. Sawyer, 44 N. H. 198, 205 (semble), Accord. If a j oint c ovenant, or p ro missory note, is giv en by a married woman as principal and anoTFTer as surety, the coverture of the p rincipal, althougha defen ce to her, IS no d*eieuce t6 the S urety. 'Stillwell v. B'ertrand, 22 Al-k. 375 ; Davis v. Statts, 43lflU 103 ; Jones v. urostliwaiie, 17 Iowa, 393; Allen v. Barryhill, 27 Iowa, 534, 539; Adams v Curry, 15 La. An. 485 ; Yale v. Wheelock, 109 Mass. 502 ; Winn v. Sanford, 145 Mass. 302, 148 Mass. 39 ; Browning r. Carson, 163 Mass. 261 ; Whitworth v. Carter, 43 Miss. 61 : Foxworth v. Bullock, 44 Miss. 457 ; Wild Co. v. Maxwell, 63 Mo. 486; Lobaugh SECTULl *\ BitKER «L KENNETT. Ill ^ L. D. BAKER, Respondent, v. P. G. KENNETT, Appelant. &J} -^Z- In the Supreme Court, Missouri, October Term, 1873. [Reported in 54 Missouri Reports, 82.] s^y*~^\H ' s^^i Wagner, Judge, delivered the opinion of the Court. 1 This was an action on a promissory note executed by the defendant on the 1st day of May, 1872, in favor of the plaintiff for the sum of eight thousand dollars. The record discloses these facts : That at the time the note was made and executed, the plaintiff was the owner of a tract of land in Jefferson County, and that the defendant, Press. G. Kennett, then a minor under the age of twenty-one, was desirous of purchasing the same. The parties finally came to an agreement, and the price was fixed at eight thousand dollars, plaintiff making to the defendant, Kennett, a deed for premises, and he executing the note sued on, due and payable seven months after date, with ten per cent interest fi*om'""'^L-25jk the date thereof, with his mother and sister signing the note as his sureties. The evidence clearly shows that the land was not worth the ^^ p sum agreed to be paid for it. Kennett took possession of the same, " making considerable improvements thereon, and on the 15th day of / / p ~ Sept. 1872, whilst he was still an infant, he went to the plaintiff and demanded back his note, offering to re-convey the land, and pay the interest due on the note. Shortly after his majority, he offered to pay two thousand dollars, and re-convey the property to plaintiff, and give him the improvements that he had put upon the premises, but this offer was refused. On Nov. 10th, 1872, Kennett attained his majority, and he aban- doned the premises, leaving a man there to take care of them, saying that there would be a lawsuit about them, and that the tenant should keep them for whoever became ultimately entitled to them.' 2 But it is contended, that although the infant may not be bound, tne sureties are nevertheless liable. As a general proposition it is undoubtedly correct, that infancy does I , not protect the inclorsers or sureties of an infant, or those who have ( v. Thompson, 74 Mo. 600 ; Weare v. Sawyer, 44 N. H. 198, 205 ; Wagoner v. Watts, 44 N. J. 126- Erwin v: Down, 15 N. Y. 576; Davis v. Commissioners, 72 N. Ca. 441, 444, 74 N. Ca. 374, 375 ; Shallcross v. Smith, 81 Pa. 132 ; Wiggin's App. 100 Pa. 155; Smyley v. Head, 2 Rich. 590 ; Hicks v. Randolph, 3 Baxt. 352 ; St. Albans Bank v. Dillon, 30 Vt. 122. In a few of the cases just cited the coverture was known to the surety co-promisor, I but in the majority of them the report discloses nothing as to the surety's knowledge. / — Ed. 1 Everything is omitted except the opinion of the Court relating to suretyship. — Ed. - The Court decided that Kennett, having effectually disaffirmed the contract, was Dot liable. — Ed. 112 LEE V. YANDELL. [CHAF. IL jointly entered into his voidable undertakings. 1 But the cases in which this principle has been decided are clearly distinguishable from the present one. Here the undertaking of the sureties goes to the whole consideration. Story says, " that a subsequent failure of consideration is equally fatal with an original want of consideration, and if a bill is given as an indemnity, it is a sufficient answer to it that the party has not been damnified at all, or that the original claim has been extinguished." Story, Bills, § 184. By the disaffirmance of the contract the plaintiff gets back his land, and the consideration which upheld the contract is extinguished. It would be a strange doctrine which would give him back his land, and allow him to recover from the sureties the purchase-money also. The rule quoted does not apply to this case. The plaintiff con- tracted with an infant, knowing him to be an infant at the time, and after a rescission of the contract he obtains back again what he sold. This the law gives him, but it does not give him the property and the \ consideration both. 2 My opinion is that the judgment should be reversed. The other judges concur, except Judge Napton, who did not sit. J~J2f. Jrt) 77 ** D. N. LEE v'.Z. N. YANDELL. (J y In the Supreme Court, November 1, 1887. fl£*JC^*1 [Reported in 69 Texas Reports, 34.] . /? t This suit was brought by appellant against Yandell, appellee, and «- — W. A. Gray and A. M. Waldrup, on a promissory note, joint and sev- eral upon its face, but which it was alleged in the answer that Gray and Waldrup signed as sureties. The answer alleged that Yandell was non compos mentis when the note was made, and that there was no consid- eration therefor. 3 Maltbie, J. The third charge is as follows : "If you find from the evidence that the defendant Yandell, at the time he signed the note sued on, was of unsound mind to such an extent as to be unable to comprehend the nature, meaning, and effect of his act in signing such note, j-ou will return a verdict for defendants." This was also assigned as error ; and, being the only instruction given in reference to Yandell's sanity, it should be considered in the light of all the facts proven on the trial in reference to that subject. 1 Dexter v. Blanchard, supra, 26, 27, n. 2; Parker v. Baker, Clarke, ch. 136 ; Kuns p. Young, 34 Pa. 60, Accord. — Ed. 2 Patterson v. Cave, 61 Mo. 439, Accord. See also Parker v. Baker, Clarke, ch. 136. — Ed. 3 A portion of the case, not relating to suretyship, is omitted. — Ed. SECT. I.J LEE V. YANDELL 113 While it must be regarded as an imperfect presentation of the law of the case, as a general proposition it cannot be said to be incorrect ; and the plaintiff not having called the attention of the Court to other phases of the question by asking appropriate instructions, ordinarily there would not be error in the omission. Farquhar y. Dallas; 1 Gal- lagher v. Bowie. 2 In this case, however, two other persons signed said note as sureties as well as the principal, Yandell. As a general proposition, whenever a principal on a note is dis- charged, his sureties will be also ; but to this rule there are certain well-established exceptions. For instance, the note of a married woman, without the payee having been guilty of fraud or deceit in procuring the signature of such married woman, the sureties would be liable though the principal be discharged. 2 Daniel on Neg. Inst., par. 1306 a/ Davis v. Staaps ; 8 Allen v. Berry hill ; 4 Hicks v. Randolph. 5 The same principle has been extended to sureties on notes executed by infants ; and it is believed that no valid reason can be given why sureties of a person of unsound mind should not be held liable under like circumstances, though the principal be discharged, especially so, when the payee of the note is ignorant of the fact that the principal is a lunatic ; as in such case a recover}* might be had even against the ^ lunatic, if the payee acted in good faith. Pomeroy's Equity. 6 The ■contract of a surety is, that if the principal does not pay, he will, and sound policy as well as the plainest principles of justice demand, that when there is a valid consideration, and the payee has done nothing to •deceive or mislead either principal or surety, and the principal is held to be not liable, on account of some disability existing at the time of the making of the contract, whether such disability be coverture, in- fancy, or unsoundness of mind, the suret}' should be held to the terms of his contract. The reason given in some of the cases why the surety of a married woman is held, is that the payee and the surety knew at the time that the contract was made that the married woman might refuse to pay, or that the contract was made in reference thereto, the surety binding himself to pay in case she should avail herself of her legal rights. In case of a lunatic it might be presumed that if the payee knew of the disability, the sureties, being his close friends, would also know of it, and that the contract was made in reference to that state of facts. There was no evidence that Lee had in any manner deceived, overreached, or defrauded Yandell in procuring him to sign the note. Hence we are of opinion that the charge of the Court should have been limited to Yandell, and the question submitted as to the lia- bilities of the sureties on the principles herein enunciated. Hi versed and remanded? 1 20 Texas, 200. 2 66 Texas, 265. 3 43 Ind. 103. 4 27 Iowa, 531. 5 3 Baxter, 352. 6 Vol. 2, p. 946. 7 In Grove v. Johnstone, L. R. 24 Ir. 352, a bond was given by a principal and sure- ties conditioned upon the due collection of all sums of money which the principal, as 8 114 RUSSELL V. ANNABLE. [CHAP. IL ARTHUR W. RUSSELL v. JOHN F. ANNABLE. tN the Supreme Judicial Court, Massachusetts, November, 1870. [Reported in 109 Massachusetts Reports, 72.] Contract, brought August 3, 1870, against one of the sureties in a joint and several bond given under the Gen. Sts. c. 123, § 104, to dis- solve an attachment. Ames, J. 1 It is well settled that one partner cannot bind his asso- ciates by affixing his signature, in the name and style of the firm, to an instrument under seal. 2 To make such a transaction binding, it must appear that there was either a previous authority, or a subse- quent ratification on the part of the other partners, adopting the sig- nature as binding upon them. Cady v. Shepherd ; 3 Van Deusen v. Blum; 4 Swan v. Stedman ; 5 Dillon v. Brown. 6 The report in this case presents no evidence of any previous authority or subsequent ratifica- tion, and it follows that the bond is not so executed as to bind the members of the firm. The bond purports to be the joint and several contract of certain persons named therein as principals, and the defendant and George M. Stevens as sureties. The defendant's undertaking is only that the principal obligors shall fulfil the obligation which by the terms of the bond they have assumed. But if the bond was not binding upon both Dennett and Pottle (as it was not, for want of due and proper execu- tion of the instrument on their part), they assumed no obligation, and it was not binding upon the sureties. It was essential to the bond that the principals should be parties to it ; it is recited that they are so, and the instrument is incomplete and void without their signature. The remedy of sureties against their principals might be greatly em- barrassed if such an instrument as this should be held binding. There is nothing to estop any member of the firm who did not sign it, from denying that he was a party to it, and it was no part of the defendant's contract that he should be surety for one member of the firm, and not for both. The instrument is incomplete without the signature of each partner, or proof that the signature affixed had the assent and sanction of each of them. The sureties on a bond are not holden if the instru- collector, should be required to collect under certain warrants. Soon after the execu- tion of the bond and before any default the principal became and continued to be a lunatic. His lunacy, it was held, exonerated him and also the sureties from all lia- bility upon'the bond. —Ed. ~ » 1 Unly tne opimo'n of the Court and a part of the dissenting opinion are given. — Ed 2 The signatures to the bond were in the following form : — " Signed, sealed, and deliv- Dennett & Pottle, [seal] ered in presence of George M. Stevens, Edward Raymond. John F. Amiable." — Ed. 8 11 Pick. 400. * 18 Pick. 229. s 4 Met. 548. 6 ll Gray, 179. SECT. I.] RUSSELL V. ANNABLE. 115 ment is not executed by the person whose name is stated as the prin- cipal therein. It should be executed by all the intended parties. Bean v. Parker; 1 Wood v. Washburn. - The instrument, being found incapable of taking effect as a specialty, cannot operate as a simple contract. Cases have indeed arisen, in which a bond, duly executed, expressing a contract which the parties had a right to make, has been held to be valid at common law, although not made with the formalities, or executed in the mode, provided by a statute under which it purports to have been given. See Svveetser v. Hay 3 and cases there cited. But we find no case in which it has been held that a written instrument, purporting to be a specialty, and plainly intended by the parties to have all the incidents and characteristics of a bond in the strict and technical sense of that word, has ever been transmuted by the Court into a simple contract, for the reason that it has not been properly executed to take effect as a contract under seal. It is therefore held, by a majority of the Court, that there should be judgment for the defendant. Wells, J., dissenting. This suit is against the surety alone. Exe- cution of the bond by him is admitted. There is a principal obligor legally bound ; because upon the face of the bond, and the statements of the report, the partner who signed the bond is bound thereby. Van Deusen v. Blum ; 4 Dillon v. Brown. 5 It does not appear, and is not alleged in the answer, that the defendant was misled in regard to the execution by the principal ; or that he had any reason to suppose that the instrument was to be executed otherwise than as stated in the report, and as appears on its face ; or that it was not understood and intended by the defendant that it should be delivered in the form in which it now appears. It may fairly be presumed that the signatures were attached in the order in which they stand upon the paper. If so, the defendant knew that the signature of the principals was written by one of them only. If he signed it, or consented to its delivery, with knowledge of the mode in which it was executed in behalf of the prin- cipals, he is bound by it. A party to a sealed instrument may be held bound by it, notwithstanding the fact that some of the persons who are, by the form of the instrument, parties to it, have not executed it. Cutter v. Whittemore; 6 Adams v. Bean ; 7 Herrick v. Johnson ; 8 Ken- dall v. Karland. 9 The case of Adams v. Bean is especially in point. Even if it should be held that the burden is upon the plaintiff to show that the defendant delivered or consented to the delivery of the bond under such circumstances as to bind him, notwithstanding its invalidity to bind both partners, yet this aspect of the case does not appear to have been presented in the court below, or to have been considered in drawing up the report. The point presented arises upon the objection " that there was no legal execution of it by the principals, and there- 1 17 Mass. 591. 2 2 Pick. 24. 3 2 Gray, 49. 4 18 Pick. 229. 5 11 Gray, 179. c 10 Mass. 442. 7 12 Mass. 137. 8 11 Met". 26. 9 5 Cush. 74. 116 JONES V. THAYER. [CHAP, II. fore it was void as to the defendant." This objection is sustained only by the fact stated, that it was executed in the partnership name by one of them only. As the legal result contended for does not follow con- clusively from the facts stated in the report, but depends upon other facts not alleged and apparently not considered, it seems to me that the proper order in the case would be, that the report be discharged, and the case stand for trial upon the facts. The plaintiff's claim is a meritorious one, and he ought not to be defeated of his remedy upon any mere technicality. If, in fact, the defendant consented to the delivery of this bond knowing that it was signed by one of the prin- cipals without authority from the other, it seems to me that it would be allowing a technicality to prevail over substantial justice to permit this defence to succeed without further opportunity to prove the facts. I do not think the report requires that we should hold the plaintiff thus strictly. Judgment for the defendant. 1 >\ ^%, ,~_3&- C - J - 0NES ASIVASOTHE t7 . B. W. THAYER, J£n t he S upRffffE Judici al C ourt. Massachusetts, March Term, Action of contract upon this guaranty, signed by the defendant : " For value received I hereby guarantee to Messrs. Jones & Wheel- wright the prompt payment of W. W. Messer's note dated March 20th, 1852, and payable in eight months from date for five hundred and seventy and T ^j dollars." The case was submitted to the decision of the court upon the following facts : — The plaintiffs received from Messer, in payment for merchandise, a promissory note, corresponding to the description in the guaranty, pay- able to his own order, but not indorsed. The defendant, at the time of signing the guaranty, was shown this note, and was paid a commis- sion for his guaranty. Neither party then knew that the note was not indorsed. In Ma}-, 1852, Messer went to California, and has never 1 Stewart v. Behm, 2 Watts, 356, would seem to support the dissenting opinion of Wells, J. But the facts are meagrely reported. The Court say: Where the ohligee has acted with good faith, what has he to do with the mistakes or misconcep- tions of the obligor? Here the principal obligor signed the name of his firm; and the point of defence is rested on an assumption of the fact that the surety supposed the signature would bind both the parties. But his mistake was in a matter of law which he was bound to know ; and even had it been in a matter of fact, which was the basis of his motive for becoming bound, it would not avail him, unless it were \ndueed by the misrepresentation of the obligee. Here it seems the obligee was not present at the act of execution ; and as there is no pretence of misrepresentation or concealment by him at any time, there was no color for the defence." See also Weare v. Sawyer, 44 N. H. 198, 205; Dickerman v. Bowman, 14 Wis.-388. — Ed. SECT. I.] JONES V. THAYER. 117 since resided in Massachusetts. His note was left at a bank in Boston for collection, and the usual demand and protest for non-payment were made, and notice thereof given to the defendant, who, on going to the bank, -for the first time found out that the note was not indorsed, and refused to pay it. J. W. May, for the plaintiffs. C. A. Welch, for the defendant. This case was decided in February, 1860. Dewey, J. The defendant resists the claim of the plaintiffs upon this guaranty, on the ground that he guaranteed Messer's note for $570.65, and the plaintiffs held no note against Messer. Upon the production of the instrument signed by Messer, it appears to have been in form a promissory writing by which Messer promised to pay to his own order the sum above named, and the paper in this form was delivered to the plaintiffs in payment of certain articles of merchandise, without the indorsement of Messer on the back thereof. It is then said that such a promise to pay to one's own order requires an indorse- ment by the maker to give it legal effect as a note payable to a third person. This is so, and had the question arisen upon a promise made prospectiveby to guarantee a note of Messer made payable to the plain- tiffs, the guarantor might well object that the note produced did not correspond with the instrument that he stipulated to guarantee. But the case before us is presented under a different aspect. The guaranty was not in reference to a note to be made, or a note executed by Messer not seen by the guarantor, but to an instrument presented to the defendant as the basis of the negotiation, and as the particular paper containing the promise to be guaranteed, and for which guaranty a valuable consideration was paid by the plaintiffs to the defendant. Under these circumstances, it must be taken to be a guarant}' of t he J particular instrument which the pl aintiffs then held, and whic h was_ex- | hibited to the defen dant. Both parties were equally ignorant of the fact that the name of Messer was not indorsed upon the note. The paper shown to the defendant is now in the same state in which it then^ was, and all the rights that could attach from the relation of the par- ties thereto as holder or as guarantor do now exist as they were then disclosed. If the instrument be less available to the guarantor in case he is required to pay the same than he supposed it to be, that was an error of his own for which he must be responsible. The defendant, having, upon the presentation of this instrument by the other part}', treated it as a note, and having taken his commission for guaranteeing it as such, must be bound by it, so far as concerns this objection. The case of Veazie v. Willis, 1 was in many of its features like this. There, as here, the real state of the note was misunderstood b}- both parties to the guaranty. The names of the maker and one of the indorsers were forgeries, but that fact was unknown to the parties i 6 Gray, 90. 118 YORKSHIRE RAILWAY WAGON CO. V. MACLURE. [CHAP. II. when the guaranty was procured. In that case the defect was not one apparent upon the paper, as the present was, and to that extent it was a stronger case for the defendant. Whether the putting into circulation of this paper by the maker, Messer, by delivery to a third party in payment for merchandise, although without his indorsement, would give it the effect of a note payable to bearer, and which as such might be enforced b}' a holder for value, we have not found it necessary to decide. There is nothing in the case to sustain an}' valid defence by reason of a want of demand and notice of non-payment of the note by Messer. Judgment for the plaintiffs. YORKSHIRE RAILWAY WAGON CO. v. MACLURE. Chancery, before Kay, J., December 7, 8, 15, 20, 1881. {Reported in Law Reports, 19 Chancery Division, 478.] The Cornwall Minerals Railway Company were in want of money, and their borrowing powers under their act were nearly exhausted. In the month of June, 1876, negotiations took place between them and the Yorkshire Railway Wagon Company for an advance of £30,000 to the Railway Company. The Railway Company were advised that they could not give a valid security for the proposed advance as a loan, but that the agreements next mentioned were within their powers. Accord- ingly an agreement under seal was made between the companies, dated the 20th of June, 1876, by which it was agreed that the Wagon Company should let, and the Railway Company should hire, for the term of five years, fifteen locomotive engines (therein stated to belong to the Wagon Company, and to bear their name-plates), at the 3 7 early rent of £4,428. The Railway Company was bound to keep the engines in repair, and if default was made in any of the payments the Wagon Company might seize and take away the engines : on the due completion of the agree- ment the Railway Company were to have the option of purchasing the engines at £1 each. On the same 20th day of June, 1876, three of the directors of the Railway Company — John W. Maclure, J. Nield, and A. O. Sherriff — signed a guaranty as follows, appended to the agreement : — " To the Yorkshire Railway Wagon Company, Limited. — In consid- eration of your letting the above-mentioned engines to the Cornwall Minerals Railway Company, on the terms above-mentioned, at our request, we, the undersigned, hereby jointly and severally guarantee the due payment to you by the said Cornwall Minerals Railway Com- pany of all rent payable by them in pursuance of the above-written SECT. I.] YORKSHIRE RAILWAY WAGON CO. V. MACLURE. 119 agreement up to and including that payable on the 1st day of January, 1879. And we also jointly and severally guarantee the observance and performance by the said Cornwall Minerals Railway Company up to the said 1st day of January, 1879, of all the stipulations on their part contained in the above-written agreement." A similar agreement and a similar guaranty were made as to two hundred railway wagons, the rent for them being £2,952. The engines and wagons had been part of the rolling stock of the Railway Com- pany, and it was alleged and not denied that a formal delivery of them to the Wagon Company had been made, but no bill of sale had been executed, and they continued to be used by the Railway Company. It was admitted at the bar that the £30,000 had been received, and had been applied by the Railway Company in payment of debts owing by them. In 1879 the Wagon Company brought an action against John W. Maclure, one of the directors who signed the guaranty, and the exec- utor of A. O. Sherriff (the third, J. Nield, being dead insolvent), and by amendment against the Railway Company alleging, as appeared to be the fact, that the rents for the engines and wagons had not been paid ; and that the Railway Company had sold them to the Great AVestern Railway Company ; and claiming damages for breach of the guaranties, and payment of the rent and interest thereon. Maclure, by his statement of defence, pleaded that the sale of the enoines and wagons was nominal, and made in order to disguise the fact that the transaction was a loan ; that the borrowing the money was ultra vires and illegal, and that the Wagon Company had no right of action ; also that the Wagon Company had been negligent in not pressing for payment from J. Nield and from the Railway Company. J. Virtue, the executor of A. O. Sherriff, made a similar defence, except as to giving time. The Railway Company (who had been made parties by amendment) made a similar defence, except as to the default of the Wagon Company in not pressing the Railway Company for payment. Romer, Q. C, and Bunting, for the Wagon Company. Fischer, Q. C. , and Cope, for the Railway Company. Higgins, Q. C. , and Prior, for Maclure. Kay, J. 1 There remains the case against the chairman, Mr. Maclure, and the other directors who signed the guaranties. Mr. Maclure pleads that the agreements were made under the following circum- stances : — The fifteen engines and two hundred wagons were, at the time such agreements were made, in fact the property of the Cornwall Min- erals Railway Company. That company, being desirous of borrowing 1 The arguments are omitted, together with so much of the opinion as relates to the liability of the Railway Company. The learned judge decided that the transaction was a mortgage of the rolling stock to secure a loan of £30,000, and was invalid because beyond the powers of the company. — Ed 120 YORKSHIRE RAILWAY WAGON CO. V. MACLURE. [CHAP. II. a sum of money, and having no available borrowing powers under their acts, as the plaintiff company were at that time fully aware, agreed with the plaintiff company that the loan should be made to the Railway Company by the plaintiff company of the sum of £30,000, and that by way of repayment by instalments of the principal sum borrowed, and payment of interest thereon, the Railway Company should pay to the plaintiff company certain fixed quarterly sums for the period of five years ; and to disguise the fact that such transaction was a loan, and that such payments were for such principal and inter- est, and to give a color to the transaction, it was further agreed that there should be a nominal sale by the Railway Company to the plain- tiff company of the engines and wagons ; and that formal agreement should be made as if there were a loan with an option to purchase at a nominal sum. Such borrowing was ultra vires the Railway Company, and illegal, as the plaintiff company w T ell knew at the time of their making the loan. Mr. Maclure was chairman of the company throughout this trans- action, and his defence, to say the least of it, is startling. It is not- less so because the solicitors of the company, who seem to have advised the directors that the transaction was legal and right, as appears by the minute of the 6th of April, 1876, are the solicitors on the record for Mr. Maclure in this action. It was argued by his counsel that, looking to the effect on the debenture holders, the transaction was malum in se, and language was used which seemed to me at the time not only strange on his behalf, but utterly unwarranted by the facts of the case. I see no reason for believing that the directors did anything malum in se. They conceived they had hit upon a lawful mode of evading the Acts of Parliament, and seem to have been so advised, but the real question is whether there was not consideration for their guaranty. In the German Mining Company's case 1 the money was paid by the guarantors after the first decision, as appears at p. 43 of the report, no doubt being suggested as to their liability to pay it. In Chambers v. Manchester and Milford Railway Company 2 Lord Black- burn says this : " The plaintiff had become security for a loan to the company by signing a joint promissory note. When the note became due, the bank had a right to come upon him and the co-surety, but he could not have sued the company for money paid to their use ; he paid it to discharge a loan which was not contracted by the company in compliance with the restrictions imposed by their act." Lord Blackburn ther e does not doubt the right of the lender to recov er against the sureties, althoug h the loan was to a railway com p an y wincii could not borrow. Probably the very reason in this case for requiring the guaranty was the doubt that existed whether the com- pany could be compelled to repay the money. I asked for authority upou this point, but none was cited. I therefore must decide that the directors are liable upon their guaranties. UD.M.&G.19. 2 5 B. &S. 588, 612- SECT. I.] SWIFT V. BEERS. 121 Upon the whole case, I hold that the transaction was a borrowing by the railway company, and an attempt to give a security for the loan on the rolling' stock, and that this, so far as the company was con- cerned, was ultra vires and void. I must therefore dismiss the action against the company. 1 must declare that the sureties are liable for the unpaid instalments of the loan which are covered by their guaran- ties ; 1 must order payment by Maclure, and, if required, there must be an administration order against the estate of Sherriff. The plaintiffs must pay the Railway Company's costs, and Maclure, and Sherriff's executors must pay the plaintiffs' costs against them. 1 •=^1^7. ?/'___ debt is justl y owing, although, from some defect or incapacity, the pn n- ^ cipal is not li able in an action . Thus, where the makers of a nofe were married women, incapable (then) of making a note, the accom- modation indorser was still held liable. 3 The guarantor of a lease is liable, although only one of the two lessees executed the lease. 4 In that case Judge Bacon speaks of this class of cases, mentioning, among others, the guaranty of goods sold to an infant. So the guar- antor of a note purporting to be made by two, where the signature of one is unauthorized, is liable. 5 In all these cases the debt is justly owing to the plaintiff ; and through no fault of his, he is unable to recover against the principal, or one of the principals. Third. A guarantor cannot set up, by wa y of set-off, a claim distinc t rsu** from that on w nicn lie is suecT! The right of set-off (that is, as distin- 1 Remsen v. Graves, 41 N. Y. 475 ; Zabriskie v. C. C. and C. R. R. Co., 23 How |U. S.) 399. 2 15 Wend. 502. 3 Erwin v. Downs, 15 N. Y. 576 ; see Kimball v. Newell, 7 Hill, 116. 4 McLaughlin v. McGovern, 34 Barb. 208. " Sterns v. Marks, 35 Barb. 565. 124 PUTNAM V. SCHUYLER. [CHAP. II. guished from a defence arising upon the claim itself) belongs only to the principal debtor, and can be used only at his option. Such is the doctrine of Gillespie v. Torrance, 1 and this is all which that case decides on this point. By indirection, however, it implies that a defence to the claim (as distinguished from a set-off), is available to the guarantor. To the same effect is Lewis v. McMillen. 2 Fourth. But there are still other cases which are not embraced within either of these three preceding classes : cases where the plain- tiff is the original party to the con tract, and therefore has not rec eived it by assignment from the guarantor ; where the proposedjile fence is n ot the incompetency of the principal to contract ": and" where it arises out of the contract itself, and not by way of set-off. In these the guarantor has been permitted to make the defence. H e has thus, as to the original contract, be en allowed to set up u sury, 3 duress of his principal, 4 partial failure of consideration. 5 3.nd I find no case which intimates that when a person has obtained an oblig a- % ^~"7 ti oii from a principal by fraud, he can wipe out the fraud by obtai ning s*7 a surety to the obligati on. Assuming that, in justice and equity, the obligee, by reason of fraudulent acts on his part, has either no claim, or a less claim, against the principal, I see no reason why he should stand in a better position against the guarantor. The distinction which has been pointed out, viz., that inability on the part of the principal to contract is no defence to the guarantor, while fraud in the contract is, may be found in the civil law. This says that personal defences do not pass to others, but that defences inherent in the thing, such as, among others, fraud and duress, are available to sureties. 6 " If, in the principal obligation, there is any essential vice which may annul it, as if it has been contracted by force, if it is contrary to law, or to good manners, if it be founded only on a fraud, or on some error which may suffice to annul it; in all these cases the obligation of the surety is likewise annulled." 7 The defendant offered to prove acts of the plaintiff's testator tending to show that he obtained the notes improperly from the maker ; that he took advantage of her confidence in him, and that she did not owe him. If these facts be true, he ought neither to recover of her repre- sentatives on the notes, nor of the defendant on her guaranties. The judgment should be reversed, and a new trial ordered, costs to abide the event. Present — Learned, P. J., Boardman and James, JJ. Judgment reversed, and new trial ordered, costs to abide event? 1 25 N. Y. 30f>. ' 2 41 Barb. 420. 8 Morse v. Hovey, 9 Paige, 197 ; Parshall v. Lamoureaux, 37 Barb. 189. 4 Osborn v. Bobbins, 36 N. Y. 365 ; Strong v. Granuis, 26 Barb. 122. 5 Sawyer v. Cbambers, 43 Barb. 622. 6 Dig. 44, 1, de exceptionibus, c. 7, § 1 ; Cod. 2, 24 (23) de fidejuss. 2. 7 Strahan's Domat, bk. 3, tit. 4, § 5, art. 2 ; id., bk. 3, tit. 4, § 1, art. 10. 8 Hagar v. Mounts, 3 Blackf . 57 ; Bryant v. Crosby, 36 Me. 562, Accord. — Ed. f. If y^^c, ^^ ^ <* S^0T. I.] HAZARD V. GRISWOLD. HAZARD a^d Others v. GRISWOLD In the United States Circuit Court, District ok Rhode Island. -JJ , August 4, 1884. [Reported in 21 Federal Reporter, 178.] Action of Debt on Bond. Edwin Metealf, for plaintiffs. Saml. R. Honey and Arnold Greene, for defendant. Before Gray and Colt, JJ. Gray, Justice. This is an action of debt, commenced in the Supreme Court in the State of Rhode Island, on March 3, 1883, by four citizens of Rhode Island against a citizen of New York, on a bond dated August 24, 1868, and executed by Thomas C. Duraut as principal, and the defendant and S. Dexter Bradford as sureties, binding them jointly and severally to the plaintiffs in the sum of $53,735. The fifth plea 1 alleges that Durant, at the time and place of the making of the supposed writing obligatory, " was unlawfully impris- oned "by the said plaintiffs and others in collusion with them, and then and there detained in prison, until, by the force and duress of imprisonment of him, the said Thomas C. Durant, he, with the said defendant as surety, made the said writing, signed and sealed and delivered the same to the said plaintiffs as their deed." To this plea the plaintiffs have demurred, because it does not allege that the writing was executed by the defendant under force and duress of imprisonment of himself, nor that he did not voluntarily execute it as surety with knowledge that it was executed by Durant as principal under force and duress of imprisonment, as alleged in the plea. This plea does not set forth facts enough to make out a defence. Duress at common law, where no statute is violated, is a person al defence, which can only be ^ . s et up by the person subjec ted to the duress ; and duress to the princi- yyt£»*&" pal will not avoid the obligation of a surety ; at least, unless the surety, r a t the time of ex ecuting t ne obligation, is ignorant o f 'tne circumstances which render it voidabl e by the principal" Thompson v. Lockwood ; 2 Fisher r. fShattuck ; 3 Robinson y. Gould ; 4 Bowman y. Hiller ; 5 Harris v. Carmody ; 6 Griffith v. Sitgreaves. 7 The case of Hawes v. Mar- chant, 8 in this court, was not a case of duress at common law, but of oppression by the illegal exercise of official power in excess of statute authority, and was decided upon that ground. Demurrers sustained. 9 4 1 1 Cush. 55. 7 90 Pa. St. 161. 1 Only what relates to this plea is here given. — Ed. 2 15 Johns. 256. 3 17 Pick. 252. 5 130 Mass. 153. 6 131 Mass. 51. 8 1 Curtis, 136. 9 Huscombe v. Standing, Cro. Jac. 187 ; Wayne v. Sands, Freem. 351, 3 Keb. 238, B.C.; Mantel v. Gibbs, Browul. 64; McCliutick v. Cummins, 3 McL. 158 (semble); Plummer v. People, 16 111. 358 ; Tucker v. State, 72 Ind. 242 (semble) ; Jones v. Turner, £> 's1*+si*-»-? S*\J -^ / *^~? **<_ *t^^- — "^^^7 ~* 126 GRIFFITH V.^ITGREAXES. GRIFFITH and Others'i;. SITGREAVES. In the Supreme Court, Pennsylvania, April 4, 1879. [Reported in 90 Pennsylvania Reports, 161.] April 4th, 1879. Before Sharswood, C. J., Mercur, Gordon, Pax* , son, Woodward, Trunkey, and Sterrett, JJ. Error to the Court of Common Pleas of Northampton County : Of January Term, 1879. No. 232. Assumpsit by Matthew H. Griffith, James Roberts, and J. Milton Butler, partners, trading as Griffith, Roberts, & Butler, against Theo- dore R. Sitgreaves, to recover $2,90o.G8, the amount of seven promis- sory notes, of which defendant was the accommodation indorser for Robert C. Pyle, the maker. The defendant pleaded non assumpsit. A jury trial was dispensed with. The Court having found the fact that the notes were signed and de- livered b}* Pyle to the plaintiffs under and by reason of duress of im- prisonment and duress per minus, held, that the same were absolutely void as against Pyle as maker and Sitgreaves as indorser in the hands of a person who was a party to said duress, or of a holder who had '&&*+'$ notice thereof before he received said notes. And that in an action on ^<^j2_ sa ^ notes by the plaintiffs against Sitgreaves, it was competent for ""the latter to set up as a defence the duress of Pyle, and especially so where the fact was found as in this case, that the duress was effected through the agency of one of the plaintiffs in this action. Exceptions were filed to this decision which the Court overruled. 1 IT 7 . IK Schuyler, for plaintiffs in error. IT. Green, for defendant in error. Mr. Justice Paxson delivered the opinion of the Court May 7th, 1879. We are next to consider the question whether the defendant, who is sued as indorser of the notes, can take advantage of the duress prac- tised upon the maker. In Huscombe v. Standing, 2 the defendant hav- ing been sued on a bond, on which he was surety for one Street, entered a plea that the bond was obtained by duress of his principal. The plaintiff demurred to this plea, and, without argument, it was held that "it was not any plea for the surety, although it had been a good 5 Litt. 147 (semble) ; Thompson ;-. Buckhannon, 2 J. J. Marsh. 416 (semble) ; Oak v. Dustin, 79 Me. 2.3 ; Robinson v. Gould, 1 1 Cush. 55 ; Bowman v. Hiller, 1.30 Mass. 15.3 : Harris v Carmody, 131 Mass. 51,53 ; Thompson v. Lockwood, 15 Johns. 256 (semble), Record. In Strong v. Grannis, 26 Barb. 122. a defendant, who signed a note as surety with knowledge of the duress practised upon the principal maker, successfully resisted an action brought by the holder of the note. But in this case the arrest was procured by the perjury of the payee. — Ed. 1 The statement of facts is abridged, the arguments are omitted, together with a part of the opinion not relating to suretyship. — Ed. 2 Cro. Jac. 187 JL^<<—) SECT. I.] GRIFFITH V. SITGREAVES. 127 plea for the said Street ; for none shall avoid his own bond for the imprisonment or duress of any other than himself. The same doctrine is recognized in Bacon's Abridg., title Duress A., and 2 Rolle's Abridg. 124. The later authorities are conflicting, with no adjudicated case in Pennsylvania. Mantel v. Gibbs, 1 Robinson v. Gould, 2 Plum- mer v. The People, 3 McClintick v. Cummins, 4 and Thompson o. Lock- wood, 5 were cited by plaintiff's as sustaining the doctrine that the duress which will avoid a contract must be offered to the party who seeks to take advantage of it. On the other hand, Strong v. Grannis, 6 Osborn v. Robbius, 7 and Fisher v. Shattuck 8 were cited on behalf of the defendant as sustaining the opposite view. I have examined these cases with some care, and do not regard them as controlling authority on either side. They depend very much upon the pleadings or their special circumstances. I have no doubt of the correctness of the general principle laid down in the older cases that duress, to be a good plea, must be offered to the person who seeks to take advantage of it. As in the case of two joint and several obligors in a bond, a plea by one defendant of duress practised upon the other would be a bad plea, for the reason that if his signature was obtained without duress, of what consequence is it to him that his co-obligor signed under duress? In all the cases cited, the duress was either upon the party seeking to avoid the instrument sued upon, or it was known to him. Thus, in Robinson v. Gould, 2 the action was on a note made by A to B, to procure the release of C from an unlawful arrest, brought about by B. Here A entered into an independent contract, not as surety, but as principal, with a full knowledge of all the facts, and as the Court said, upon a sufficient consideration: "The case, therefore," in the language of the Court, " is exactly this: a promise by the defendant, upon a valid consideration, fully assented to b}- him without coercion or restraint of any kind." McClintick v. Cummins 4 decides nothing that affects the case in hand. The Court said : " It is not necessary to decide this question (the duress), as, from the facts, it does not appear. that the imprisonment of Johnson was unlawful, or that he was de- ^ ^ tained until he executed the notes." Plummer v. The People, 3 was ' a suit upon a recognizance against the principal and the sureties. The principal was committed by a magistrate in the State of Illinois for a larceny committed in another State. Afterwards, the magistrate, in the absence of the accused, and without proof, made out a second ktimus for an offence committed within the State. The accused, to relieve himself from confinement, gave the recognizance in question. The defendants pleaded duress, and the Court below gave judgment in their favor upon the plea. The Court above affirmed the judgment as yi-to the principal, and reversed it as to his sureties, saying: " I do not *" -~z~fl hold that the same facts might not also have been made available by 1*****^^. i i Brownlow, 62. 2 u Cush. 155. 3 16 111. 358. £" Jr* / " / * * 3 McLeau , 15 8- 5 15 Johns. 259. 6 26 Barb. 122. // 7 36 N. Y. 365. 8 17 P i c k. 2 52. '£>r>- 128 GKIFFITH V. SITGKEAVES. [CHAP. II. the sureties, at the proper time, and in a proper form of plea, but they cannot avail themselves of them by a plea of duress of their principal." This case recognizes the doctrine I have already suggested, that duress, as a plea, is bad if the duress set up was upon some person other than the party pleading it. It also appeared that the sureties had knowl- edge of the duress when they signed the recognizance. This was also the case in Strong v. Grannis, cited by the defendant. Here the action was against two persons as makers of a promissory note ; the defence set up was that the note was executed under duress of im- prisonment of one of the makers, and to procure his release therefrom, and was signed by the other as his surety. The Court held that the surety might avail himself of the duress. This was a case in the Supreme Court. Osborn v. Robbins was in the Court of Errors and Appeals. The note was given by a son, with his father as surety, in settlement of an arrest upon the charge of rape, under circumstances that indicated an abuse of legal process, for the purpose of oppression. The Court held that the surety could avail himself of the duress. This case is not authority to the extent claimed for it by the defendant, for the reason that the surety was the father of the defendant. This is one of the exceptions recognized in Huscombe v. Standing, and most of the old authorities. 1 It bv no means follows that because duress of another is not a 2,ood plea, and that in some instances it may not even avail as a defence, that it cannot be set up successfully in any case. Had the defendant, after indorsing these notes, passed them to the plaintiffs and received the money therefor, it is very clear he could not set up the defence of duress of the maker ; so if he had indorsed them with notice of the duress, or if the notes were in the hands of an innocent third party for value. In these and main* other instances that might be named, the defence referred to would, for obvious reasons, be unavailing. The case in hand, however, differs materially from them and from all the cases cited. Here the defendant was the surety of the maker, nothing more, and defends under the broad plea of non assumpsit. The form of the transaction is not material, so long as the contention is between the original parties. The defendant's contract is to pa}' the notes, if his principal fails to do so ; and he may be proceeded against immediately upon such failure. But upon payment of the money he has his remedy over against his principal. It is a recognized doctrine in the law of surety, that whatever discharges the principal debtor, also discharges the surety. There are exceptions to the rule, as where one had signed a joint and several note with a married woman as surety. 1 Pars, on Bills and Notes, 244. Nor will this rule apply to cases in which a surety is required, for the very reason that the principal may have a defence that will defeat the claim against him. "o- 1 For additional illustrations of this exception, see McClintick v. Cummins, 1 Mc- Lean, 158, 159 ; Plummer v. People, 16 111. 358, 360 ; Harris v. Carmody, 131 Mass. 51 ; Owens v. Mynatt, 1 Heisk. 675. — Ed. SECT. I.] SAWYER V. CHAMI5ERS. 129 In these and the like cases, the surety knows when he binds himself that he has no remedy over, lie is not, therefore, misled. The de- fendant indorsed the notes without any knowledge, or anything to put him upon inquiry, of the duress prac tised upon his principal. The result will be, if a recovery is had against the defendant, he will have no redress against the maker, and this by reason of the duress upon the maker, the act of the plaintiffs. He is therefore directly injured by it, and has a right to defend upon that ground. Had he signed the notes with knowledge of the duress, it would have been his own folly, and the consideration being good, the plaintiffs would have been en- titled to recover. But the}' made the mistake of keeping the maker a quasi prisoner in New York by threats of an arrest, whilst the notes were sent to the indorser for his signature, thus depriving him of his remedy over against his principal. In doing this, the plaintiffs over- reached themselves. The judgment is affirmed. 1 V^ SAWYER and Others v. CHAMBERS and Others. In the Supreme Court, New York, November, 1864. [Reported in 43 Barbour, 622.] Action upon a promissory note, against the indorsers. 2 Bij the Court, Ingraham, J. The defence set up in this case must be considered as sufficiently alleged in the answer, as the answer was amended by the Court to embrace the facts so stated. Whether this is to be considered an offer to show a total or partial failure of consideration between the plaintiffs and the makers, is imma- terial. Between the original parties such a defence is admissible. The offer was to show that the whole consideration of the note, or the greater part of it, had failed ; that the note was given on account of the goods, which the plaintiffs had agreed to sell to the company ; that only a small portion of such goods had been delivered, and that the amounts so delivered had been actually paid for. I am at a loss to see an}' ground on which this evidence could be excluded. Surely an accommodation indorser is in no worse condition than the maker. He has a right to any defence which the maker could avail himself of. If the makers had been sued upon the note, the}' could have shown that the note was given on account of goods to be deliv- ered, and that such goods had never been received. The plaintiffs, under such proof, would have no claim against the defendants, as the 1 Patterson v. Gibson, 81 Ga. 802, Accord. See Hawes r. Marchant, 1 Curt. 136, 142. — Ed. 2 Only the opinion of the Court upon the point of suretyship is given. Ed. 130 SAWYER V. CHAMBERS. [dlAP. II. note would be without consideration. So long as the courts permit the consideration of a note to be inquired into under any circumstances, the facts presented in the defendants' offer must come within such a rule. The plaintiffs have no right to recover on this note, from any of the parties, anything more than enough to indemnify them for the duck sold or thereafter delivered to the company, and the defence that no such amount of duck had ever been delivered should not have been excluded. 1 1 Gunnis v. Weigley, 114 Pa. 191, Accord. — Ed. PAUL V. CIIKISTIE, SECT. II. J - \ SECTION II. /ii (fences based upon the Extinguishment or Suspension of the Liability of the Principal Debtor to the Creditor. PAUL and Wife, Executrix of DEAN, v. CHRISTIE. In the Court of Appeals, Maryland, May Term, 1798. [Reported in 4 Harris and Mc Henry, 161.] This was an action of debt upon a joint and several bond, executed by James Christie, and Robert Christie, the defendant, to the plaintiff's testator, on the 30th of August, 1775. The following case was stated for the opinion of the Court, viz. That the bond, upon which this suit is brought, was duly executed on the 30th of August, 1775, by James Christie and Robert Christie, to Hugh Dean, in his lifetime, in which bond the said James was the principal debtor, and the sa id Robe rt bound as hi s securit y, jointly and se verally . That the said James is and always has been a British subject, and the said Robert is a citizen of this State ; and that before the impetration of the writ in this case, the whole of the principal (excepting £5), and all the interest due on the said bond (except the interest accrued from the 4th of July, 1776, to the 3d of September, 1783), were paid by the said James to the plaintiff. The question was, whether or not the plaintiff ought to recover inter- est from the 4th of July, 1776, to the 3d of September, 1783 (during the war between this country and Great Britain), from the defendant. Hollingsworth, for the plaintiffs. Cooke and Milligan, for the defendant. The General Court were of opinion, that the plaintiffs ought to recover of the defendant the interest on the bond upon which this suit is brought, which accrued during the war between the United States and Great Britain. Judgment for the plaintiffs on the case stated. 1 1 Bean v. Chapman, 62 Ala. 58, Accord. In this case Stone, J., delivering the opinion of the Court, said : " It is contended for appellees that being only sureties their liability is accessorial, and that they cannot be held for a greater sum than their principal, Lakin, is liable to pay. The foregoing is certainly the rule in a proper case. Whenever the inquiry is one of original liability the surety cannot be held to a greater extent than the principal is bound for. T he principal's obligation defines the boundary upwar d, be yond wh ich the surety's obli gatio n cannot be carried. So, the creditor can do no act by which he reduces the principal's liability without at the same time reducing the surety's liability, at least to the same extent. But the rule is very di fferent where t he l aw red uces or absolves the principal's liability, without the tault or procurement of the creiiu ^or. in sucli case the principal's d efence is personal, and does not aff ect or impair the surety's liability, uniess ne aiso nave a personal defence. Uiseharge of tha 132 GUILD V. BUTLER. [CHAP. II. WILLIAM H. GUILD v. ALFORD BUTLER. In the Supreme Judicial Court, Massachusetts, May 3, 1877. [Reported in 122 Massachusetts Reports, 498.] Contract upon a promissory note made by the defendant payable to Robert W. Dresser & Co. or order, and b}- them indorsed to the plaintiff. At the trial in the Superior Court, befoi'e Pitman, J., it appeared that the note was made by the defendant for the accommodation of Dresser & Co., who at the same time gave him an agreement in writing that they would themselves pay the note at maturity ; that the plaintiff did not know this when he took the note, but, after learning it, and after the commencement of this action, united with other creditors of Dresser & Co. in a petition in bankruptcy against Herman D. Bradt, the sur- viving partner of that firm (Dresser, the other partner, having died), and afterwards voted for and signed a resolution of composition under the provisions of the Act of Congress of June 22, 1874, § 17, by which the plaintiff, with the other creditors of Dresser & Co., agreed to take, in full settlement, twenty per cent of their claims, to be paid in three equal instalments, in ten days, three months, and six months from the acceptance of that resolution, which' was approved by the Court in bankruptc}' and recorded. The judge instructed the jury that, if the note sued on was an accom- modation note, and the defendant, as between him and Dresser & Co., tvas but a surety, and the plaintiff knew that it was an accommodation note when he entered into the resolution of composition, the fact of his entering into that resolution would constitute a defence to this action. The jury returned a verdict for the defendant ; and the plaintiff alleged exceptions. P. H. Hutchinson., for the plaintiff. M. Stone, Jr., for the defendant. Gray, C. J. By the existing acts of Congress upon the subject of bankruptcy, a bankrupt's estate may be settled, and the bankrupt discharged, in either of three ways : — First. The estate ma} r be administered in the ordinaiy manner by assignees appointed for the purpose, and a certificate of discharge be principal iu bankruptcy, statute of limitations, or, if he be dead, failure to preseut or file the claim against his estate within the time required by law, are of this class. Minter v. Br. Bank, 23 Ala. 762 ; Hooks v. Br. Bank, 8 Ala. 580 ; Cawthorne v. Weiss- inger, 6 Ala. 714; Woodward v. Cligge, 8 Ala. 317. In such cases the surety can pay the debt at any time after it matures, and then proceed against the principal for money paid for his use, and at his request. Whether if tlie present defendants pay this debt, they cannot recover of Lakin, their principal, the whole sum they have to pay, includ- ing interest, is a question we need not here discuss." SECT. II.] GUILD V. BUTLER. 133 granted by the Court, with the assent, in some cases, of a certain pro- portion of the creditors who have proved their claims. Any person liable as surety for the bankrupt may, upon paying the debt, even after the commencement of proceedings in bankruptcy, prove the debt, or stand in the place of the creditor if he has proved it ; or, the debt not having been paid by him nor proved by the creditor, ma} 7 prove it in the name of the creditor or otherwise. U. S. Rev. Sts. § 5070; Mace v. Wells ; * Hunt v. Taylor. 2 But the surety's liability to the creditor is not affected by any certificate of discharge granted to the principal. 3 U. S. Rev. Sts. § 5118; Flagg v. Tyler. 4 Second. The estate may be wound up and settled by trustees nomi- nated by the creditors, upon a resolution passed at a meeting for the purpose by three-fourths in value of the creditors whose claims have been proved, and confirmed by the Court, and upon the signing and filing, by such proportion of the creditors, of a consent in writing that the estate shall be so settled ; in which case such consent and the pro- ceedings under it bind all creditors whose debts are provable, even if they have not signed the consent nor proved their debts ; the trustees have the rights and powers of assignees ; the winding up and settle- ment are deemed proceedings in bankruptcy ; the Court ma\' summon and examine on oath the bankrupt and other persons, and compel the production of books and papers ; and the bankrupt may obtain a certifi- cate of discharge in the usual manner. U. S. Rev. Sts. § 5103. Third. The creditors, at a meeting ordered by the Court, either before or after an adjudication of bankruptcy, may resolve that a composition proposed by the debtor shall be accepted in satisfaction of the debts due them from him. Such resolution, to be operative, must be passed by a majority in number of the creditors whose debts exceed fifty dol- lars in value, and by a majority in value of all the creditors, and must be confirmed by the signatures of the debtor, and of two-thirds in num- ber and one-half in value of all his creditors. The debtor is required to attend at the meeting to answer inquiries, and to produce a state- ment of his assets and debts and of the names and addresses of his 1 7 How. 272. 2 108 Mag., 508- 3 Ex parte Williamson, 1 Atk. 82 ; Brown v. Carr, 7 Bing. 508 ; Moody v. King, 2 B. & C. 558 ; Ingles v. Macdougal, 1 Moore, 196 ; London Co. v. Buckle, 4 Moore, 153; Wolf v. Stix, 99 U. S. 1 ; Knapp v. Anderson, 15 N. B. R. .316; Garnett v. Roper, 10 Ala. 8+2 ; Phillips v. Wade, 66 Ala. 53 (overruling Lunsford v. Baskins, 6 Ala. 512) ; King v. Central Bank, 6 Ga. 258 : Phillips v. Solomon, 42 Ga. 192 ; Jones v. Hawkins, 60 Ga 52 ; Lackey v. Steeve, 121 111. 598 ; Gregg v. Wilson. 50 Ind. 490 ; Post v. Losey, 111 Ind. 74; Ray v. Brenner, 12 Kas. 105; Burtis v. Wait, 33 Kas. 478; Moon v. Waller, 1 A. K. Marsh. 488 ; Serra v. Hoffman, 30 La. An. 67 ; Coch- rane v. dishing, 124 Mass. 219; Robinson ?•. Soule, 56 Miss. 549; Claflin v. Cogan, 48 N. H. 411 ; Linn v. Hamilton, 34 N. J. 305 ; Hall v. Fowler, 6 Hill, 630 ; McCombs v. Allen, 18 Hun, 190 ; Wilson v. Ffeld, 27 Hun, 46 ; Jones v. Hagler, 6 Jones (N. Ca.), 542 ; Bank v. Simpson, 90 N. Ca. 467 ; Noble v. Scofield, 44 Vt. 281, Accord. But see contra, because of the creditor's consent to the discharge of the principal debtor, In re Macdonald, 14 N. B. R. 477 ; Calloway v. Snapp, 78 Ky. 561. — Ed. * 6 Mass. 33. 134 GUILD V. BUTLER. [CHAP. II creditors. The resolution, with this statement, is to be presented to the Court ; and if the Court, after notice and hearing, is satisfied that the resolution has been duly passed and is for the best interest of all concerned, the resolution is to be recorded and the statement filed, and the provisions of the composition shall be binding on all the creditors whose debts, names, and addresses are shown on the statement, and may be enforced by the Court on motion and reasonable notice, and regulated by rule of court, or may be set aside bj' the Court for any sufficient cause, and proceedings in bankruptcy had according to law. U. S. St. June 22, 1874, § 17. This section, providing for a composi- tion under the supervision of the Court, is taken from and substantially follows § 126 of the English Bankrupt Act of 1869, St. 32 & 33 Vict. c. 71. See Ex parte Jewett; 1 Re Whipple. 2 It has been determined in England, by decisions of high authority and upon most satisfactory reasons, that a creditor, by participating in either of the three forms of proceeding, whether by assenting to a cer- tificate of discharge, or b}" consenting to a resolution, either for a wind- ing up through trustees, or for the acceptance of a composition proposed by the debtor, does not release or affect the liability of a surety. Browne v. Carr; 3 Megrath v. Gray; 4 Ellis v. Wilmot ; 5 Simpson ?>. Henning ; 6 Ex parte Jacobs, 7 overruling Wilson v. Llo3'd. 8 The proceedings for a composition under the statute, depending for their validit}' and operation, not upon the act of the particular creditor, but upon the resolution passed by the requisite majority of all the creditors, binding alike on those who do and on those who do not con- cur therein (if their debts are included in the statement filed by the debtor), and finally confirmed and established bj- the Court upon a con- sideration of the general benefit of all concerned, differs wholly in nature and effect from a voluntaiy composition deed, which binds only those who execute it. Oakeley v. Pasheller ; 9 Bailey v. Edwards ; 10 Bateson v. Gosling ; u Oriental Financial Corporation v. Overend ; 12 Cragoe v. Jones ; Gifford v. Allen ; 13 Phoenix Cotton Manuf . Co. v. Fuller. 14 Assuming, therefore, that this defendant, having signed the note for the accommodation of the indorsers, was to be considered as a surety for them, and that the plaintiff, after acquiring knowdedge of that fact, stood as if he had known it when he took the note, yet no defence is shown to this action. Exceptions sustained. 16 1 2 Lowell, 393. 2 Ibid. 404. 3 2 Russ. 600 ; 5 Mo. & P. 497 ; and 7 Bing. 508. 4 L, R. 9 C. P. 216. 5 L. R. 10 Ex. 10. 6 L. R. 10 Q. B. 406. 7 L. R. 10 Ch. 211. 8 L. R. 16 Eq. 60. 9 4 CI. & Fin. 207 ; s. c. 10 Bligh, N. R. 548. 10 4 B. & S. 761. " L. R. 7 C. P. 9. ia L. R. 7 Ch. 142. 13 3 Met. 255. 14 3 Allen, 441. 15 Megrath v. Gray, L. R. 9 C. P. 216; Ellis r. Wilmot, L. R. 10 Ex. 10; Simpson *. Henning, L. R. 10 Q. B. 406; Ex parte Jacobs, L. R. 10 Ch. 211 (overruling Wil- *on v. Lloyd, L. R. 16 Eq. 60) ; Fisse v. Einstein, 5 Mo. Ap. 78 ; Mason Co. v. Ban- croft (N. Y. Supreme Ct., 1876), 4 Cent. L. J. 294, Accord: — Ed. ■^-^-1 *-■*«*<. SECT. II.] * VILLARS V. PALMER. /T W. VlLLARS v. K T. f^ALMTCR, Administrator, and Another. In the Supreme Court, Illinois, January Term, 1873. [Reported in 67 Illinois Reports, 204.] Appeal from the Circuit Court of Vermilion County; the Hon. James Steele, Judge, presiding. This was a bill in Chancery, by William Villars, against Levin T. Palmer, administrator of the estate of Guy Merrill, deceased, and John G. Leverich, to enjoin proceedings at law by Palmer as administrator of the estate of Merrill, for the use of Leverich, upon a promissory note, given by one George W. Taylor as principal, and signed by the complainant as surety, and payable to said Guy Merrill as master in Chancery. The bill showed that the estate of Taylor was solvent, and that the debt could have been made if the claim had been presented before it was barred by the two years' limitation. The Court below dismissed the bill, and the complainant appealed. Toicnsend & Young and E. S. Terry, for the appellant. 0. L. Davis and J. B. Mann, for the appellees. Mr. Justice Sheldon delivered the opinion of the Court: — The claim on the part of the surety in this case is, that, as bj T the neglect of the creditor to present his claim against the estate of Taylor, the principal, all remedy in respect to the debt has been lost against the estate of the principal, that should operate to discharge the surety. The complaint is of mere dela}', not of any affirmative act on the part of the creditor, whereby the surety has been affected. But it is the well-established principle, that mere dela}- on the part of the creditor to proceed against the principal does not discharge the responsibility j of the surety. In cases of this sort, there is not any duty of active diligence incum- bent on the creditor. All that the surety has the right to require of the creditor, in the absence of any statute provision, is, that no affirma- tive act shall be done that will operate to his prejudice. It is his business to see that the principal pays. The law furnished the surety here with ample remedies for his pro- tection. He might have paid the debt according to his undertaking, and have sued the principal himself; or he might have gone into a court of equity after the debt became due, and obtained a decree that the principal should pay it ; or he might, under the statute, have given to the creditor written notice to put the note in suit, and thus have compelled him to sue the principal. If he has seen fit to lie by, and the neglect to proceed against the principal in his lifetime, 01 against his estate after his decease, has ^v JUSBbjf/*. f 136 AUCHAMPAUGH V. SCHMIDT. [CHAP. II. been the means of depriving the surety of his indemnity, he must abide by the loss, and cannot throw it upon the creditor. Without more, we need but to refer to the cases of the People v. White ct 5 - SECT. II.] <£MES V. MACLAY. ^ ^139 AMP^S v. MACLAY and OtherC ^ In the Supreme Court, Iowa, December 15, 1862. •^y* [Reported in 14 /oit>a Reports, 281.] Complainant and others were the sureties upon the bond of one McDonald, who was elected sheriff of Clinton Count}' in 1851. Foi an alleged nonfeasance, Maclay sued on this bond in 1854. The prin- cipal and his sureties severed in their defences. A demurrer of the sureties in that action to the reply of the plaintiff was overruled, and judgment was rendered against them. On the trial of the issues between Maclay and the sheriff, the latter succeeded. A motion was made by the sureties to set aside the judgment against them, which, as far as shown by the record, was not determined. Complainant now brings this bill to set aside said judgment. The cause was referred to a Master, who recommended that the bill should be dismissed. This report was confirmed, and complainant appeals. A. R. Cotton, for the appellant. Grant & Smith, for the appellee. 1 Wright, J. The judgment upon demurrer against the sureties was rendered on the 4th of March, 1848. The verdict and judgment in favor of McDonald, the principal, was on the 5th of the month. Respondents resist the relief asked, upon the ground that there was neither accident, mistake, misrepresentation, nor fraud, and that Chan- cery has no jurisdiction, although the party has lost his remedy at law through ignorance of a fact which he might have learned with due dili- gence and inquiry, or by bill of discovery. Penny v. Martin. 2 Or, the same principle may be stated as in Ballance v. Loomis, 8 that if a party seeks to set aside a judgment bv proceeding in Chan cer}', he musfsliow himself clear of all laches, and also that everv effort was — -■■■■■■■■ »^ ■ — •.. ■ ^ -____— ^_^ " made to pr event a judgment agai nst him. Or, still again, as in Kreich- baum v. Bridges & Powers, 4 following Story's Eq. Jur. § 887, that to authorize relief against a judgment, it must appear that it is against conscience to execute it, and also that the injured party could not have availed himself of the main facts, at or before the trial, and that there was no fault or negligence on his part. And see Houston v. Wolcott. 5 C omplainant does not controvert these principles, but places his ca se u pon th e ground that as the principa l, McDonakyb y the verdic t and j udgment was , disc harged from his lia bility, the sur etie s are, in equit y, discharged . And this proposition he bases upon the doctrine that the rights of the surety, and his relation to his principal are the same after as before judgment, and that when from any cause the principal ceases to be bound, the liability of the surety should likewise cease. Or, follow- 1 The citations of counsel are omitted. — Ed. - 4 John. Ch. 566. 3 22 His. 82. 4 1 Iowa, 14. 5 7 Iowa, 173. S*-*^ w f ^ V p~**r ~~&~^jZ) s^. C/ (/ ^ ^A^Uu 140 AMES V. MACLAY. L CHAP. IL ing Jackson y. Griswold, 1 the argument is this : that a decision against the debt discharges the suret}'. And this, not upon the ground that he is a party to such decision, but because the judgment extinguishes the debt; and the principal thing being thus destroyed, the incident (the obligation of the surety) is destroyed with it. The effect is the same as a release by the creditor, or a payment by the debtor, who may do any act in discharge of his surety, but nothing by which he shall be concluded beyond his original objection. As favoring these views, complainant cites a number of cases, to the effect that if the creditor after judgment shall disable himself from collecting his debt from his principal debtor, he is held to have exon- erated the surety also. Of this class is Hubbell v. Carpenter, 2 where the creditor after judgment gave the maker of the note an obligation not to collect the same against him, but reserved the right to enforce it against the indorser. So, in the Manufacturers' and Mechanics' Bank v. The Bank of Pennsylvania, 3 where the creditor after judgment entered into an agreement with the maker of the note to stay proceed- ings against him. And substantially to the same effect is Storms v. Thorn, 4 and the other authorities cited. 5 We are not inclined, how- ever, to give these cases weight, as applied to this case. To make them applicable we must first assume that the judgment in favor of the sheriff was the act of the creditor, after judgment against the sureties, in the same sense and to the same effect as the stipulation to give time to the principal debtor, or an agreement to release him. The reason- ing which upholds this proposition is not tenable. If the judg mentj n favor of McDonald in equitv discharges the sureties fro in" their lia- bilit}*, it must 7je not because it was the agreement or act of Maclay, *- -i — ■ '■•■" - *" ' ' " 1 4 Hill, 529. 2 5 Barb. 520. 3 9 Watts & Serg. 335. 4 3 Bail.. 314. 6 If the creditor has obtained a judgment against a surety, a subsequent release or suspension by him of his remedy against the principal debtor has been properly held to give the s urety n o common law de fence to the enforcement of the judgment against him. Pole v. Ford, 2 Chitty, 125 ; Bray v. Manson, 8 M. & W. 668 ; La Farge v. Ilerter, 3 Den. 157. In Jenkius v. Robertson, 2 Drew. 351, and Findley v. U. S. Bank, 2 McL. 44, the surety was held to be defenceless even in equity. But these ca ses must be dee med erroneous. Relief in equitv is given to the surety almost everywhere in this cou ntry. hi re McDonald, 14 N. 15. K. 477 ; Carpenter v. Devon, 6 Ala. 718; Morley v. Dickin- son, 12 Cal. 561 ; Curan v. Colbert, 3 Ga. 239 ; Trotter v. Strong, 63 111. 272 ; Gipson v. Ogden, 100 Ind. 20; Chambers v. Cochran, 18 Iowa, 159; Sherraden v. Parker, 24 Iowa, 28 ; Gustine v. Union Bank, 10 Rob. (La.) 412; Carpenter v. King, 9 Met. 511 ; Moss v. Pettingill, 3 Minn. 217 ; Anthony v. Capel, 53 Miss. 350 ; Rice v. Morton, 19 Mo. 263 ; Smith v. Rice, 27 Mo. 505; Wcstervelt v. Freeh, 33 N.J. Eq. 451 ; Boughtou v. Orleans Bank, 2 Barb. Ch. 458 ; Storms v. Thorn, 3 Barb. 314 ; Hubbell v. Car- penter, 5 Barb. 520 (reversing s. c. 2 Barb. 484, and explaining Ray v. Tallmadge, 5 Johns. Ch. 305 ; La Farge v. Herter, 3 Den. 157 ; and Lehox v. Prout, 3 Wheat. 520) ; Bangs v. Strong, 4 N. Y. 315, 7 Hill, 250, 10 Paige, 11 ; Cooper v. Wilcox, 2 Dev. & B. Eq. 90; Dixon v. Ewiug, 3 Oh. 280; Comm. Bank v. Western Bank, 11 Oh. 444; Blazer v. Bundy, 15 Oh. St. 57 ; Manufacturers' Bank v. Pa. Bank, 7 W. & S. 335 (see Hagey v. Hill, 75 Pa. 108, 111) ; Shelton v. Hurd, 7 R. I. 403 ; Parker v. Nations, 33 Tex. 210 (statutory) ; Baird v. Rice, 1 Call, 18 ; Shields v. Reynolds, 9 W. Va. 48S. BECT. II.] AMES V. MACLAY. 141 but because it being determined that the principal is not liabhvthe i ncidenta lliabilit y, that of the s uretiesTlikewise ceases. Chitty, in his work on Contracts, 400, quoting from Pothier, says that : tl It results from the definition of a surety's engagement as being accessory to a principal obligation, that the extinction of the principal obligation necessarily induces that of the surety ; it being of the nature of an accessory obligation that it cannot exist without its principal ; therefore, whenever the principal is discharged, in whatever manner it may be, not only by actual payment or a compensation, but also by a release, the surety is discharged likewise ; for the essence of the obli- gation being that the surety is only obliged on behalf of a principal debtor, he therefore is no longer obliged when there is no longer any principal for whom he is obliged" This rule comports with the duties and relations of the surety to the principal, accords with reason and good conscience, and is fully recognized by the authorities. Is there, then, in this case, any technical or stern rule of the law to prevent its application? We conclude not, and that we can do what right reason and good conscience dictate, without running counter to the rule which requires diligence from suitors in all courts, or the equivalent principle that a party who applies for relief against a judgment at law must show injustice, and that he has been without fault or negligence. What are the facts of this case? McDonald, the sheriff, was the principal, and of course primarily and principally liable for the alleged nonfeasance. He, after a full and fair trial, has been entirely and absolutely released from his liability. In other words, it has been authoritatively determined by the judgment of a competent tribunal that the alleged nonfeasance was not established, and that plaintiff (one of the present respondents) had no cause of action. By this adjudication the principal >l is no longer obliged," or obligated, so far as the claim of Maelay is concerned. Now, does it accord with the alphabet principles governing the relation of principal and surety that the latter shall be obliged to [jay that for which the former is no longer liable? Or rather, is it not consistent with every rule governing the relation that as the condition of the surety is to be favored, he should not be required to pay a debt which he can never recover from his principal, the principal obligation having been extinguished'? But it is suggested that this view loses sight of the fact that the sureties severed in their pleas, and that the^v were guilty of negligence in not relying upon the same defence as that made by their principal. We are not unmindful of the, at least, apparent strength of the argu- ment. It is to be remembered, however, that judgment was rendered against the sureties before the issues were tried between their principal and the creditor. It was, therefore, practically impossible for them to rely upon such subsequent adjudication as a protection to themselves. And then suppose they had pleaded the same defence, and the result bad been the same as it was. Would this have been such diligence aa to obviate the effect of the rule for which respondents insist ? If it 142 AMES V. MACLAY. [CHAP. II would, we confess that we cannot see how the} - should be placed in an}- worse position by having mistaken their proper legal defence. But the argument that the sureties are concluded and forever estopped from resisting the judg ment against them* by their failure to presenTtheir pro per defence is rad ically d efectiv e in that it ignores the great gen eral principles at the founda tion of their liability, and c ontmuesTIie acc essory obligatio n af ter that whi ch induced it has been completely ex tinguish ed. We would not say that if the principal "had been discharged before, and the sureties had failed to rely upon that fact as a legal defence, they could be afterwards heard in equit}\ That case is not before us. They could not avail themselves of a defence which did not exist. Their failure to make the same defence as their principal should not, in equity, conclude them to the extent of com- pelling the payment of money for their principal, for which it is con- clusively and finally settled he was never liable. Indeed, under such circumstances, we do not believe that a case can be found sustaining such liability. We give no weight to the fact that a motion was made to set aside the judgment. No action was ever taken upon it. Complainant might, therefore, resort to his concurrent equitable remedj'. This he has done. The decree is Reversed.* 1 Norris v. Pollard, 75 Ga. 358 ; Dickason v. Bell, 13 La. An. 249; Miller v. Gas- kins, Sm. & M. Ch. 524, Accord. I n accordance with the doctrine of the principal case, a surety may def eat the creditor i n a n action against himself by setting up a judgment against the creditor in a >^rior proceeding ag ainst the principal debtor. Urummond v. ir'restman, 12 Wheat. 5T5 f (semble) ; State v. Parker, 72 Ala. 181 ; Brown v. Bradford, 30 Ga. 927 ; Baker v. Merriam, 97 Ind. 539 ; Cram v. Wilson, 61 Miss. 233 ; State v. Coote, 36 Mo. 437 : Stoops v. Wittier, 1 Mo. Ap. 420, 422; Gill v. Norris, 11 Heisk. 614. The case of State Bank v. Robinson, 13 Ark. 214, contra, is likely to be overruled. Effect of Judgment agahist Principal in a Subsequent Proceeding against Sweti/. — It woul d seem to be clear, upon principle, that the surety, when sued by the credito r. s hould not be prejudiced by^a, prior judgment against the principal debto r. Accord- i ngly, such a mdgment was not admitted as evidence in the following case s : Ex parte Young, 17 Ch. Piv. 668 ; Lucas v. Bond, 6 Ala. 826 ; Fireman's Co. v. McMillan, 29 Ala. 147 ; Arrington v. Porter, 47 Ala. 714 ; Pico v. Webster, 14 Cal. 202; Governor v. Shelby, 2 Blackf. 26; Lastigue v. Baldwin, 5 Martin (La.), 193; De Greiff v. Wil- son, 30 N. J. Eq. 435 ; Douglass v. Howland, 24 Wend. 35 ; Jackson v. Griswold, 4 Hill, 522; Moss v. MeCullough, 5 Hill, 131 ; People v. Russell, 25 Hun, 524; McKellar v. Bowell, 4 Hawks, 34; Giltinan v. Strong, 64 Pa. 242; State v. Cason, 11 S. Ca. 392. But in the following cases the judgment against the principal was held to be a dmissible as prima facie evidence of the validity of the creditor's claim against t he surety : Drummond v. Prestman, 12 Wheat. 515 (semble) ; State v. Martin, 20 Ark. 629 ; Taylor v. Johnson, 17 Ga. 521: Weaver v. Thornton, 63 Ga. 655; Graves v. Bulkley,25 Kas. 249 ; Fay v. Edmiston, 25 Kas. 439; Whitehead v. Woolfolk, 3 La. An. 42; Macready v. Schenck, 41 La. An. 456; Iglehart v. Mackubin, 2 Gill & J. 235 (overruling Beall u. Beach, 3 Har. McH. 242) ; Parr ?\ State, 71 Md. 220 ; Lowell v. Parker, 10 Met. 309 ; Lafayette Association v. Kleinhoffer, 40 Mo Ap. 388; Commis- sioners v. Butt, 2 Oh. 348 ; State v. Colerick, 3 ( >h. 487 ; State v. Roswell, 14 Oh. Sfc. 73 ; Atkins v. Baily, 9 Yerg. Ill ; Barksdale v. Butler, 6 Lea, 450; Munford v. Over- jeers, 2 Rand. 313 ; Jacobs u. Hill, 2 Leigh, 393 ; Stephens v. Shafer, 48 Wis. 54 SECT, 12. | PETTY V. COOKE. J43 PETTY v. COOKE. In tiik Queen's Bench, June 22, 1871. [Reported in Law Reports, 6 Qieen's Bench, 794.| Declaration by payee against maker of a promissory note for £100 with interest, payable on demand. Fifth plea, on equitable grounds, that the defendant made the note jointly with S. D. Steele, for the accommodation of S. D. Steele, and as his surety, of which the plaintiff at the time of making of the note had notice. And that after the note became due S. 1). Steele paid the full amount due to the plaintiff in satisfaction of the note. Replication, on equitable grounds, that the payment of the note was a fraudulent preference, being made voluntarily by Steele in contem- plation of bankruptcy ; that plaintiff was wholly ignorant that the pay- ment was a fraudulent preference ; and that the payment was afterwards avoided by the trustees of Steele in bankruptcy, and the plaintiff repaid, as he lawfully must, the amount of the note to the trustees. Demurrer and joinder in demurrer. 1 Herschell, in support of the demurrer. The replication is no answer to the pleas. The creditor, by accepting payment of his debt from the principal debtor, has discharged the surety. Payment under a fraudu- lent preference is not void but voidable ; when the payment was made it was not a void payment, and there was a time when the surety could have pleaded it as a discharge. There was also an interval of time during which the surety had lost the right to step in and become the creditor of the principal debtor ; the surety is prejudiced in having lost that right ; the payment by the principal debtor is therefore a good payment so as to discharge the surety. Any contract between the creditor and the principal debtor prejudicial to the rights of a surety discharges the surety. [Blackburn, J. Is there any case which says that an innocent act unconsciously done discharges the surety? In Hulme v. Coles, the Vice-Chancellor says: " The principle of discharging a surety by the giving of time by the creditor is a refinement of a court of equity, and I will not refine upon it." I also think we ought not to refine upon that doctrine.] See also Stoops v. Wittier, 1 Mo. Ap. 420 ; Cormack v. Commonwealth, 5 Binn. 184, where the surety had been given an opportunity to defend the suit against the principal. In Massachusetts, the Court has gone so far as to make the judgment against the principal conclusive evidence of the creditor's right against the surety. Tracy v. Goodwin, 5 All. 409 ; Dennie v. Smith, 129 Mass. 143. —Ed. 1 The statement of the pleadings is abridged ; the concurring opinions of Lush and Hannen, J.J., and portions of the arguments are omitted. — Ed. M4 PETTY V. COOKE. ICHAP. II. Blackburn, J. It seems to me clear, both in equity as well as law, that the plaintiff is entitled to sue the surety, and that there is nothing stated in the pleadings which has discharged the latter from liability. As early as Rees v. Berrington, 1 a case decided in 1795 by Lord Lough- borough, it was held, on what certainly seems artificial reasoning, that where time is given by a creditor to a principal debtor without the con- sent of the surety, the surety is in equity discharged, however short the time may be, on the ground that he is thereby deprived of his right on paying off the creditor to sue the principal debtor. Lord Eldon, also, in Samuell v. Howarth, cited in the notes to Rees v. Berrington, 2 says : " The rule is that if a creditor without the consent of the surety gives time to the principal debtor, bj' so doing he discharges the surety, that is, if time is given by virtue of positive contract, between the creditor and the principal — not where the creditor is merely inactive. And in the case put, the surety is held to be discharged, for this reason, because the creditor by so giving time to the principal has put it out of the power of the surety to consider whether he will have recourse to his remedy against the principal or not, and because he, in fact, can- not have the same remedy against the principal as he would have had under the original contract. ... It has been truly stated that the renewal of these bills might have been for the benefit of the surety, but the law has said that the surety shall be the judge of that, and that he alone has the right to determine whether it is or is not for his benefit. The creditor has no right, it is against the faith of his contract to give time to the principal, even though manifestly for the benefit of the surety, without the consent of the surety." I think it impossible to read the principle laid down by Lord Eldon without thinking that it is based upon highly technical reasoning, however accurate it may be. It is clear that a creditor who gives time to the principal debtor with- out reserving his right against the surety, and alters the rights of the surety, discharges him ; but that time given by a creditor, which in numberless cases does not injure the surety, should discharge him, is to my mind not justice, although established b}' courts of equity. The ground, however, on which this doctrine is based, is that by giving time to the principal debtor the creditor does an act which is against good faith, and injurious to the surety ; that doctrine cannot apply to the present case, for the creditor accepted money which he had no right to refuse, and the acceptance of which he had no means of know- ing would injure the surety. He therefore did no act injurious to the suret}', and the surety is not discharged. I think Pritchard v. Hitch- cock 3 is in point. Judgment for the plaintiff.* i 2 Ves. 540; 2 Wh. & T. L. C. (Eq.) 3d ed. 887. 2 2 Wh. & T. L. C. (Eq.) 3d ed. 895. 3 6 M. &G. 151. 4 In Watson v. Pogue, 42 Iowa, 582 ; Harner v. Batdorf, 35 Oh. St. 113, the cred- itor was allowed to charge the surety, although he received payment from the principal with knowledge that it was a fraudulent preference. But in Northern Bank v. Cooke, NUAUl 22, 1873. 5 . Z her/ iter, 8 Li *C ^ j f- f opfnion that the defenthrnt is entitled t5 the THE EXCHEQUEE- Reported in Ijx>c Report. Kelly/C. B. 1 I am judgment of the Court. This is a case of creditor, debtor, and surety AJJJg One Jones was indebted to the plaintiff in the sura of £100, and the defendant was his surety. The plaintiff now sues the defendant for the debt, and he pleads that the plaintiff has released the debtor with- out his consent, and he is therefore discharged. Now the law upon this subject is clear and well settled. If the creditor, without the co n- sent of the sure ty, by his own ac t destr oy the debt, or der ogate from the p ower which the law confers upon the sure ty to recover it agains t 2^J^2 the debtor in c ase he shall hav e paid it to the creditor! the su rety """"""// is discharg ed. 2 But the plaintiff contends that in this case he has ,- reserved tc himself the right to recover against the surety by the deed in which the debtor is released. The plea of the defendant sets forth the deed in hmc verba ; by which it appears that Jones, the debtor, having assigned all his estate and effects to the plaintiff and another as trustees for the benefit of his creditors, the plaintiff and the other cred- itors, in consideration of the premises, did release the said Thomas Jones from his (and their) respective debts, "in like manner as if the said Thomas Jones had obtained a discharge in bankruptcy." Now the question is this, what is the effect of a release in these terms upon 13 Bush, 340, the Court declined to follow these cases. See also Newman i\ Hazle- rigg, 1 Bush, 412. The surety will not be exonerated if the principal gives to the creditor in payment of the debt a note or other obligation which is void, e. g., for usury, Mitchell v. Cot- teu, 2 Fla. 136 ; or as being ultra vires, Williams v. Gilchrist, 11 N. H. 535. But a valid payment by the principal to the creditor destroys the latter's right against the surety. Kinnaird v. Webster, 10 Ch. D. 139 ; Lackey v. Steere, 121 111. 598 (satisfaction by execution of judgment) ; Petefish v. Watkins, 124 111. 384 ; Rubli v. Norman, 7 Bush, 582 ; Stewart v. Levis, 42 La. An. 37 ; Burnet v. Courts, 5 Har. & J. 78; Baugher v. Duphorn, 9 Gill, 314 ; Merrimack Bank v. Parker, 7 Pick. 88; Chapman v. Collins, 12 Cush. 163; Coots v. Farns worth, 61 Mich. 497; Foster v. Walker, 34 Miss. 365 ; Manufacturers' Co. v. Todd, 4 Mo. Ap. 591 ; Eastman v. Plumer, 32 N. H. 239; Lancey v. Clark, 64 N. Y. 209; Woodman v. Mooring, 3 Dev. 237 ; Gibson v. Rix, 32 Vt. 824 ; Felch v. Lee, 15 Wis. 265; Greening v. Patten, 51 Wis. 146. — Ed. 1 Only the opinion of the Chief Baron is given. Bramwell, B., concurred. Pigott, B., dissented. — Ed. 2 Release of Principal Debtor. — Ex parte Smith, 3 Bro. C. C. 1 ; Ex parte Wilson, 11 Ves. 410; Ex parte Glendinning, Buck, 517; Lewis v. Jones, 4 B. & C. 506; Grundy v. Meighan, 7 Ir. L. R. 519; Bull v. Coe, 77 Cal. 54; U. S. v. Mattoon, 5 Mack. 565; Brown v. Aver, 24 Ga. 288; Lockwood i<. Penn, 22 La. An. 29; Anthony v. Capel, 53 Miss. 350; Hempsted v. Hempsted, 27 Mo. 187 ; Prior v. Kiso, 81 Mo. 241 ; Broadway Bank v. Schmucker, 7 Mo. Ap. 171 ; Kirby v. Taylor, 6 Johns. Ch. 242- Bridges v. Phillips, 17 Tex. 128 ; Paddleford v. Thacher, 48 Vt. 574, Accord. — Ed. 10 146 CRAGOE V. JONES. [CHAP. II. d the rights and the condition of these three parties? It appears to me that the meaning of these words is clear and unambiguous. If Jones, t he debtor, ha d obtained a dis char ge in ban kruptcy, he would have_been discharged not o nly jis ag ainst the plai niirt, the "C reditor, but also as agains t the def endant, the surety. It seems to me, therefore, free from""" doubt that the plaintiff by this"" release, having discharged his debtor as against the surety as well as himself, and without the consent of the surety, the surety is himself discharged. It is contended that this is a qualified or conditional release ; but I look in vain throughout the deed for any words of qualification or reservation, or imposing or creating a condition. It is true that if a debtor has obtained his discharge in bankruptcy the creditor may still recover against the surety, and he or the surety, if he pay the debt, may prove against the debtor's estate under the bankruptcy. If, therefore, the debtor had reall} T become bankrupt and obtained his discharge, although the creditor might have recovered against the surety, notwithstanding the discharge of the debtor, his right or power to do so would have been the act or consequence of the law or the statutes of bankruptcy, whereas here the discharge of the surety is his own act; and he ca nnot by his own act rese rve to h imself the right to sue the sure ty, notwithstanding tne discharge of the de btor except by the agreement of the debtor that, notwithstanding" his discharge, incase the cr edit or shall r ecover ag ains't the s urety, he will rem ain liable to the \ surety for the de bL The whole case upon this deed, simply stated, is that the plaintiff has released his debtor in like manner as if he had ob- tained a discharge in bankruptcy, and inasmuch as, if he had obtained a discharge in bankruptcy, he would have been absolutely released, and neither the plaintiff nor the defendant could have afterwards sued him for the debt, he is absolutely released now, and as such absolute release was without the consent of the surety, the suret} - is bj - law discharged. It is argued that a creditor may release his debtor and reserve to him- self the right to sue the surety, and that no doubt may be done, but only where the language of the release, or of the deed in which it is contained, is such that the debtor accepts the release subject to the conditions that he shall remain liable to pay the debt to the surety in case he shall have paid it, whether voluntarily or under process, to the creditor. Such was the case in Bateson v. Gosling, 1 where the release was contained in a trust deed under the Bankruptcy Act of 1861, but which was followed by a proviso that if the creditors, including the plaintiff, had any security for their demands, " or any demands against the debtor to the payment whereof an}' person or persons is or are liable as a surety or sureties ; the debtor ma}* execute these presents without prejudice to the same security, or to the claim against an}' surety or sureties." And this proviso was held to convert the release into a mere covenant not to sue, and to preserve the right of the cred- itor to sue the surety, and of the surety to sue the debtor ; and Willes, 1 Law Rep. 7 C. P. 9. -->. SECT. II.] PRICE V. BARKKK. 147 s J., in his judgment expressly states: "When the release in the deed is looked at, it is in terms a release subject to a proviso, and although but for such proviso it would be an absolute release, so that there could be no proceeding afterwards against a surety, yet the proviso expressly reserves the creditors' remedy against a surety, and stipulates that any creditor may execute the deed without prejudice to his claim against any surety." And again, "But if the principal debtor consented to the creditor having recourse to the surety the latter would not be dis- charged, and would have his remedy against the principal debtor." So that the release in that ease was no discharge of the debtor as against the surety by reason of the proviso. Here there is no such proviso, nor is a single word to be found throughout the deed pointing to any qualification or any reservation whatsoever. The release is in its terms a simple and absolute release by the creditor of his debtor in like man- ner as if the debtor h,ad obtained a discharge in bankruptcy. If the debtor had obtained a discharge in bankruptcy the surety would have had no right of suit against him, and as the plaintiff, the creditor, has put his debtor in a condition in which the surety has lost his right to proceed against him, and this act has been done b}- the plaintiff, the creditor, without the consent of the surety, I hold that he has thereby discharged the surety, and this action is therefore not maintainable. Judgment for the defendant, 7^. T&- PRICE v. BARKER. In the Queen's Bench, February 22, 1855. [Reported in 4 Ellis $• Blackburn, 760. | Coleridge, J., now delivered the judgment of the Court. 1 This was an action by the public officer of a banking company against the Elxecutors of George Hopps. The declaration was on a bond con- ditioned for the security to the bank of a banking account of one William Brown. The plea set out the bond, which was the joint and several writing obligatory of the said George Hopps and William Brown, and then set out a general release, made after the accruing of the causes of action, and averred that the release was made in the lifetime of the said George Hopps without the privity, knowledge, authority, or consent of the said George Hopps. The replication set out the release, which, after general words of release, contained the following proviso. " Provided always, that nothing herein contained shall extend, or be deemed or construed to extend, to prevent the said banking company, their successors or assigns, or the partners for the 1 Only the opinion of the Court is given. 148 PRICE V. BARKER. [CHAP. IL time being constituting the said company," " from suing or prose- cuting any person or persons, other than the said William Brown, his executors, administrators, or assigns, who is, are, shall, or may be liable or accountable to pay or make good to the said banking company all or any part of any debt or debts, sum or sums of money, now due from the said William Brown to the said company, either as drawer, in- dorser, or acceptor of any bill or bills of exchange or promissory note or notes, or as being jointly or severally bound with the said William Brown in any bond or bonds, obligation or obligations, or other instru- ment whatsoever, or otherwise howsoever, as if these presents had not been executed ; it being understood and agreed that, as regards any such suits or prosecutions, these presents shall not operate or be pleaded in bar, or as a release." To this replication the plaintiff demurred : and the demurrer was argued before us in the course of the last term. On the argument two questions arose : — 1st, Whether the general words of the release were restrained by the proviso, so that, in order to give effect to the whole instrument, we must construe it as a covenant not to sue, instead of a release. And, 2dly, Assuming the deed to operate merely as a covenant not to sue, whether the reservation of rights against other parties than the principal debtor contained in the proviso would prevent the surety from being discharged by a binding covenant to give time to, or not to sue, the principal debtor. To entitle the plaintiff to our judgment, it must appear that the deed operated only as a covenant not to sue, and that the rights of the plain- tiff as against the surety were preserved by the particular reservation in question, notwithstanding such covenant not to sue. With regard to the first question, two modes of construction are for consideration. One, that, according to the earlier authorities, the primary intention of releasing the debt is to be carried out, and the subsequent provision for reserving remedies against co-obligors and co-contractors should be rejected as inconsistent with the intention to release and destroy the debt evinced by the general words of the release, and as something which the law will not allow, as being repugnant to such release and extinguishment of the debt. The othe r, that, accord- ing; to the modern authorities, we are to mould and li mit the gene ral w ords oflh e release by construing it to be a covenant not to sue, aud^ t hereby allow the parties to carry out the wh ole of their mTentions b y preserving the rights a gainst parties jointly liable! We quite agree with the doctrine laid down by Lord Denman, in Nicholson v. Revill, 1 as explained by Baron Parke in Kearsley v. Cole, 2 that, if the deed is taken to operate as a release, the right against a party jointly liable cannot be preserved ; and we think that we are bound by modern authorities (see Solly v. Forbes ; 3 Thompson v. Lack ; 4 and Payler v. i 4 A. & E. 675. 2 16 M. & W. 136. s 2 Br. & B. 38. 4 3 Com. B. 540. SECT. II.] PRICE V. BARKER. 149 Homersham a ) to carry out the whole intention of the pai'ties as far as possible, by holding the prese nt to be a covenant not to sue, and not a release. It is impossible to suppose for a moment that the parties to this deed could have contemplated the extinguishment of their rights as against parties jointly liable. It was argued, indeed, that the par- ticular words of the proviso in the present case prevented this construc- tion by appearing to recognize that Brown was not to be sued, and that, in an action against him, the deed was to operate as a release and might be pleaded at bar. The words, however, that the proviso was not to extend to prevent the bank from suing or prosecuting any person or persons other than the said defendant or his representatives, which were said to show that Brown was not to be sued, are quite as appli- cable to a covenant not to sue as to a release ; and the later general words in the conclusion of the deed, " that, as regards any such suits or prosecutions" (against parties jointly liable), " these presents shall not operate or be pleaded in bar," are, we think, like the words of actual release, too general to prevent us by inference from giving effect to the plainly expressed intention that the parties jointly liable should not be discharged by an extinguishment of the debt. If, therefore , the testator, whom the defendants represent, had been in the situati on o f co-o bligor merely, we should think that he was not discharged by the deed in question.*" " It remains, however, in the second place, to consider what effect the deed had upon his liabilities in reference to his relation as surety for Brown, the principal debtor. It was thrown out, indeed, in argument, that we were bound to consider him as a principal debtor and not as a surety upon this bond, the obligatory part of the bond being joint and several without any reference to either being surety or principal. But, for the purpose of seeing the relation of the parties, we must look at the condition of the bond, as set out upon the pleadings, which plainly discloses that the defendant was a surety for the liabilities of Brown. If the question, whether a covenant not to sue, qualified by such a proviso as that in the present case, and entered into by the creditor without the consent of the surety, discharges the surety, were a new one unaffected by authority, we should pause before deciding that such a case does not fall within the general rule of the creditor diseharoino- a surety by entering into a binding agreement to give time to his principal debtor ; and we should have thought the forcible observations of Lord Truro in the recent case of Owen v. Homan 2 entitled to much consider- ation. We find, however, that the Court of Exchequer in a solemn and well-considered judgment, in the case of Kearsley v. Cole, 3 after refer- ring to all the authorities, states that the point must " be considered as settled ; " and they rest their judgment upon this, although it was not necessary to decide it, as the surety in that case had consented to the deed : which consent they treat indeed as an additional reason ; but they expressly state that it was not necessary. They state that they 1 4 M. & S. 423. 2 3 Macn. & G. 378. 3 16 m. & W. 128, 136. 150 PRICE V. BARKER. [CHAP. II. "do not mean to intimate any doubt as to the effect of a reserve of remedies without such consent ;" and they add that "the cases are numerous that it prevents the discharge of a surety, which would otherwise be the result of a composition with or giving time to a debtor by a binding instrument ;" and they then explain how it is that, in their judgment, the reserve of remedies has that effect. After this judgment, and after the strong expression of opinion by the present Lord Chancellor in his judgment in the House of Lords in the case of Owen v. Homan, 1 where he dissents from the remarks made by Lord Truro in the Court below, and states that, but for those remarks, he should have thought that the principle contended for by the plaintiffs was " a matter beyond doubt," we think that we ought to consider the law on this subject as settled, at least until it is questioned in a court of error. It seems t o b e the result of th e aut horities that a cove nan t not to sue, qualified by a rese rve of the remedies against su reties, is to allow the surety to retain all his remedies over aga inst the principal debtor ; and th at the coven ant not to s ue is to operate only so far as the rights oT the surety may not be affected . Probably many deeds of this nature are framed continually on the supposition that the law has been supposed to be settled in the man- ner stated in the Exchequer, since the time of Lord Eldon ; and we think that, sitting as a court of co-ordinate jurisdiction with the Ex- chequer, we ought not to disturb the law stated by them in a solemn judgment to be clearly settled. Our judgment, therefore, upon the demurrer in the present case is in favor of the plaintiff. Judgment for the plaintiff. 2 i 4 H. L. Ca. 1037. 2 Ex parte Gifford, 6 Ves. 805 ; Malthy v. Carstairs, 7 B. & C. 735 ; Thompson v. Lack, 3 C. B. 540 ; Wyke v. Rogers, 1 D. M. & G. 408 ; Close v. Close, 4 D. M. & G. 176 ; Green v. Wynn, 4 Ch. 204 ; Nevill's case, 6 Ch. 43 ; Bateson v. Gosling, L. R. 7 C. P. 9; Muir v. Crawford, L. R. 2 Sc. Ap. 456 (explaining Webb v. Hewitt, 3 K. & J. 438) ; Rockville Bank v. Holt, 58 Conn. 526 ; Mueller v. Dobschuetz, 89 111. 176 ; Boat- men's Bank v. Johnson, 24 Mo. Ap. 316 ; Kirby v. Turner, Hopk. Ch. 309; Lysaght v. Phillips, 5 Duer, 106. (But see Farmers' Bank v. Blair, 44 Barb. 641 ; Stirewalt v. Martin, 84 N. Ca. 4), Accord. In Nevill's Case, supra, Sir G. Mellish, L. J., said (p. 47): " The reason why a si mple release of the principal de btor d ischarges the su rety is, that it would b e a fraud on the princip al debtor to pro fess to rele ase him, ana tnen to sue the s urety, who in turn would sue h im : but where the "oarg ain is that the creditor is to r etanThi s remedy againsMhV surety, there is mi fraudjui the principal_ikl't<>r, and the Court will give e ffect to t he intention of the par ties by construing the rel ease as a covenan t not to sue t he principal debtor." T he release "oTTTie principal by the creditor will no t pvonerat.e the snrej.y, if the latter, either before or at the time of su ch release, agrees to continue lia ble. S'mith yAVinteivt M. &, VV . 'b I y ; Union Bank v. Beech, 3 H. & C. 672; Ex parte Harvey, 23 L. J. Bank, 26; Davidson v. Cooper, 8 M. & W. 755; Rockville Bauk v. Holt, 58 Conn. 526 ; Osgood v. Miller, 67 Me. 174 ; Parsons v. Gloucester Bank, 10 Pick. 533; Hutchinson v. Wright, 61 N. H. 108; Bruen v. Marquand, 17 Johns. 58; Wright v. Storrs, 6 Bosw. 600. See however, Eggemann v. Henschen, 56 Mo. 123; Broadway Bank v. Schmucker, 7 Mo. Ap. 171. — Ed. rktt ti.] JONES V. WARD. 151 JONES, Responde nt, jt>. "WARD, Appellant. ji _X__ - In the Sctreme Court, Wisconsin, February 28, 1888. [Reported in 71 FFfrconsin Reports, 152.] Lyon, J. 1 Brief!}- stated, the case, so far as there is any contro- versy, is as follows : The defendant became surety for Cook's debt to the plaintiff, and Cook indemnified him by executing to him a chattel mortgage on certain property. The plaintiff released Cook from lia- bility for such debt, without the consent of the defendant. After- wards, defendant sold his security to McArthur, without the consent of the plaintiff, for the consideration (as the Circuit Court found) of $475. The only question in the case is, Did the release of Cook also re- lease the defendant, his surety? The general rule undoubtedly is that the release of the principal debtor, without the consent of the surety, releases the surety. But if the surety is fully indemnified against lo ss a^ J2^— by re ason of having become such, a release of the principal withou t // — ^ payment ot t he debt does not release the surety. This is the rule laid \J down in fay v. lower,' 1 as applied to a case in which an unauthorized extension of credit had been given to the pri ncip al. 3 Manifestly, the same rule should be applied where the suretyis absolutel}- released from the debt. The rule is founded upon a very plain principle of justice. To illustrate : A becomes security for B to C for the payment of SI, 000. B puts property into the hands of A, worth $1,000, to indemnify him against loss because of the obligation thus assumed by him. C releases B, the principal debtor, from all liability on account of the debt, but receives no payment thereon. A, the surety, then sells the pledged property for $1,000 and retains the proceeds. It is entirely reasonable and just that, notwithstanding the release of the principal debtor, C should have his remedy against the surety for the amount realized by him in the sale of the pledged property. Such, we think, is the law. It seems to us that we have here just such a case. By the Court. The judgment of the Circuit Court is affirmed. 4 1 Only the opinion of the Court is given. — Ed. ' 2 58 Wis. 286. 3 Chilton v. Kobbins, 4 Ala. 223; Home Bank v. Waterman, 134 111. 461 (semble) ; Crim v. Fleming, 101 Ind. 154 ; Keinhaus v. Generous, 25 Oh. St. 667 ; Smith v. Steele 25 Vt. 427, Accord. — En. * Moore v. Paine, 12 Wend. 123, Accord. — Ed. X 152 ENGLISH V. DARLEY. [CHAP. IL ^^ ^_^ ~^^_ sot ^. *-£^ -T~*-^^n O —a — /-> In the Common Pis^as .Taxi; - f\ t^Sf ^ [Reported in 2 Bosanquet §• F Assumpsit by the indorsee of a bill of exchange against the indorser Lord Eldon, Ch. J., before whom the cause was tried at the West- minster sittings after last Michaelmas Term, nonsuited the plaintiff under the following circumstances : Payment of the bill being refused when due, the plaintiff commenced actions against the present defend- ant and the acceptor, and having sued the latter to judgment, took out execution thereon ; but although the acceptor had sufficient to answer the execution, the plaintiff at his instance received £100 in part pay- ment of the bill, and took his bond and warrant of attorney as a security for the payment of the remainder by instalments, together with inter- est and costs, excepting only a nominal sum, with a view to enable him T the plaintiff, to support actions against the other parties to the bill. Shepherd and Lens, Sergts., now moved for a new trial. 1 Lord Eldon, Ch. J. It is very clear that the holder of a bill may at his election sue an}' or all the parties to it, and that if they all be- come bankrupt, he may prove against the estates of all, unless he receive part of the debt from any one. And although the debt be reduced from time to time by dividends, no part of the proof shall be expunged under an}' of the commissions till 20s. in the pound have been received. As long as the holder is passive, all his remedies re- main ; and if any of the parties be discharged by the act of law, as by an insolvent debtor's act, that operation of law shall not prejudice the holder. With respect to Hayling v. Mulhall, 2 it may be observed that the marginal abstract of that case is incorrect ; for it appears from the report that the person first sued was a subsequent indorser: had the plaintiff first sued a prior indorser and discharged him from execution, it would have afforded a sufficient objection to an action against a sub- sequent indorser. If a holde r en ter into an ag pn^pnt wittl a prior i ndorser in the morning not to sue him for a certain period of j ime. and then oblige a subsequent indorser in the evening to pay the , debt, the latter mu st i mmediately resort to the very person for payment to whom the holder has plpdapH his f njth tha t hp slmll nnt. hp suprl In the case Ex parte Smith, 3 Lord Thurlow, after consulting with all the judges, was of opinion, that the holder of a bill by entering into a composition with the acceptor discharged the indorser, and accordingly ordered the proof against the estate of the latter to be expunged, pro- ceeding on the ground of the acceptor's liability being varied by the act of the holder. We all remember the case where, Mr. Richard Burke being co-surety for an annuity, the grantee gave time to the 1 The argument in support of the motion is omitted. — Ed. * 2 Bl. 1235. 3 Co. B. L. 168, 172. Ed. 4. SAMUELL V. IIOWARTII. 153 principal, and yet argued that Mr. Burke was not relieved thereby, though the principal was ; but it was answered that the grantee could make no demand upon the co-surety, because he must by so doing en- force a payment from the principal contrary to the agreement. Here the plaintiff, having taken a new security from the acceptor, has dis- charged the defendant. Heath and Kooke, Js., were of the same opinion. Shepherd and Lens took nothing by their motion. 1 , ^J&T^x*- e. — -£-^<- ^>- '*•**." / SAMUELL v. HOWARTH. p In Chancery, before Lord Eldon, C, August 7, 1817. [Reported in 3 Merivale, 272.] / £jj£ Bill in equity by a guarantor against the creditor, praying that the guaranty might be delivered up to be cancelled, and that the creditor be restrained from proceeding at law, inasmuch as he had given time to the principal debtor. 2 The Lord Chancellor. The guaranty given in this case is gen- eral in its terms, and must be construed, according to its legal effect, in favor of the surety. The liabilities of sureties are governed by principles which have been long settled in equity and are now adopted in courts of law. I say, now, because the Court of Common Pleas formerly held a differ- ent doctrine.* But at present it is firmly established that the same principles which have been held to discharge the surety in equity will 1 Many cases in accord with English v. Barley are cited in 2 Ames, Cases on Bills and Notes, 120, n. 2. To these maybe added the following: Anderson v. George, Selw. N. P. (8th ed.) 389 ; Ex parte Wilson, 11 Ves. 410 ; Isaacs Daniel, 8 Q. B. 500; Daggett v. Whiting, 35 Conn. 366 ; Randolph v. Fleming, 59 Ga. 776 ; First Bank v. Day, 64 Iowa, 118; Eggerman v. Henschner, 56 Mo. 123 ; Place v. Mcllvaine, 38 N. Y. 96 ; Seoville v. Landon, 50 N. Y. 686 ; Siebeneck v. Anchor Bank, 111 Pa. 187 ; Hamil- ton v. Prouty, 50 Wis. 592. In Devore v. Mundy, 4 Stroh. 15, the giving of time to the principal by the holder of a note, it was held, was no defence for the surety in an action brought by a subse- quent transferee of that holder, and that, too, although the subsequent transfer was after the maturity of the note. — Ed. 2 This statement of the case has been greatly abridged, and the arguments of counsel are omitted. — Ed. 3 " This defence is borrowed from a court of equity : There, if day of payment be given to the debtor, the sureties are discharged. It is the equitable right of sureties to come into a court of equity and demand to sue in the name of the creditor. Now if the creditor have given time to his debtor, the surety cannot sue him," per Gibbs, C. J., in Orme v. Young, Holt N. P. 86. See, also, Melvill v. Glendinning, 7 Taunt 126 ; Hawkshaw v. Parkins, 2 Sw. 539, 544, 545, 546.— Ed. 154 SAMUELL V. HOWARTH. [CHAP. IL operate to discharge him also at law. 1 However, as the same relief is to be obtained in both, a court of equitj- will not send a party who is suing here to a court of law for the discharge to which he is equally entitled in this place. The rule is this : That, if a creditor, without the consent of the surety, gives time to the principal debtor, b}' so doing he discharges the surety ; that is, if time is given b}- virtue of positive contract be- tween the creditor and the principal — not where the creditor is mereh' inactive. And, in the case put, the surety is held to be discharged, for this reason, because the creditor, b}- so giving time to the principal, has put it out of the power of the surety to consider whether he will have recourse to his remedy against the principal, or not ; and because he, in fact, cannot have the same remedy against the principal as he would have had under the original contract. Now, in the present case, the creditor has been supplying goods to the principal debtor, from time to time, upon a certain credit, the ex- tent of which, not being expressly stipulated between the parties, I must take to be credit given according to the usual course of trade. The surety says, I will be answerable for the amount of such goods as you shall furnish during the period from the 2d of April, 1814, to the 2d of April, 1815. It is impossible for me to hold that this is an engagement by which he (the suret}-) has rendered himself liable for an indefinite time beyond the expiration of the period limited for the delivery of the goods. It cannot be supposed that the plaintiff meant he should continue liable, after the 2d of April, 1815, so long as the defendant might choose to renew the bills of the principal debtor. You cannot contend in support of such an extravagant proposition. It has been truly stated that the renewal of these bills might have been for the benefit of the surety ; but the law has said that the surety shall be the judge of that, and that he alone has the right to determine whether it is, or is not, for his benefit. The cre ditor has no right — it is against the faith of his cont ract — to give tim e to ttie principal, even though ma nifestly for the b enefi t of t h e surety, w ithout tUe consent of th e surety. Injunction continued. ? — "7* 1 At the time Lord Eldon made this statement there were singularly few reported cases in which a surety had defeated an action at law by showing that the creditor had agreed to give time to the principal ; and these few were all cases in which a subse- quent party to a bill or note relied on the giving of time to a prior party. English v. Darlev (1800), supra: Smith v. Knox (1800), 3 Esp. 46; Gould v. Robson (1807), 8 East, 576 ; Claridee v. Dalton (1815), 4 M. & Sel. 232. ut L ord Eldon's stateme nt has been generally recognized to be correct as to all ises whe re the suretyshi p is disclosed by the form of the contra ct. Comoe v. Wolf", 8 Jiing. 156 ; Howell v.', Jones, 1 C. M & R. 97. For the Am erican decisions, which are legion, the learned reader is referred to 24 Am. & Eng. Encycl. of Taw. 822, where the cases arc arranged by States. A creditor's -^=^8 [VINT, TIMF. win: i:i:si;i;v vn"n\- ok incurs AGAINST SIRETY. 9' ^■ Agreement witn the princi pal tor forbearance, either temp orary or perpetual,_will not di scharg e the surety, if the creditor at the time of the agreement, and, as a part of it, reserves His rights against tliesnrcty. Price?'. Barker, supra, 147, 150, a, 2; cases cited - ■ -5 JU^" •zz~ /jzzfr- ■A sC& \/ +*^> : - -? -wt^ ^f-p-*^—4 TlUr - : ^tk_ A -^~, «-"C ^t-— «*L_ *~~~ [Reported in 5 Taunton, 192.] This was an action brought by the indorsee of a bill of exchange against the acceptor, and was tried before Lord Chief-Justice Mans- field, at the sittings at Westminster after last Easter Term, when a verdict was found for the plaintiff with £80 damages, with liberty to the defendant to move to enter a nonsuit, on the ground that the plain- tiff had discharged the defendant, by having accepted a cognovit, pay- able by instalments, from the drawer. The bill, as appeared on the trial, had been accepted for the accommodation of the drawer, payable at Messrs. Davison & Co.'s., Pall Mall, who refused payment, saying they knew nothing of Pocock & Son. The plaintiff had given a valuable consideration for it, and knew nothing of its being an accommodation bill till after it became j^ due. Mr. Sergt. Shepherd in Trin. Term obtained a rule nisi on the above ground. Mr. Sergt. Marshall now showed cause against the rule. 2 Mansfield, C. J. No doubt, if the defendant can succeed in estab- lishing the principle that we must so subvert and pervert the situation of the parties as to make the acceptor merel}* a surety, and the drawer the principal, the consequence contended for must follow. This case of Laxton v. Peat certainly is the first in which it was ever supposed that the acceptor of a bill of exchange was not the first person and the 1 Bulteel v. Jarrold, 8 Price, 467 ; Ashbee v. Pidduck, 1 M. & W. 564 ; Parker v. Watson, 8 Ex. 404 ; Sprigg v. Mt. Pleasant Bank, 10 Pet. 257 ; U. S. v. Howell, 4 Wash. C. C. 620 ; Locke v. U. S., 3 Mass. 446 ; Wittmer v. Ellison, 72 111. 301 ; Tate v. Wy- mond, 7 Blackf. 240 ; Lewis v. Harbin, 5 B. Mon. 564 ; Pintard v. Davis, Spencer, 205 ; Shaw v. MeFarlane, 1 Ired. 216; Holt v. Bodey, 18 Pa. 207 ; Dozier v. Lee, 7 Humph. 520 ; Burke v. Cruger, 8 Tex. 66 ; Steptoe v. Harvey, 7 Leigh, 501 ; Sayre v. King, 17 W. Va. 562, Accord. See also supra, 140, n. 5. — Ed. 2 The statement of the case is taken from the report in Marshall, 14. The argu ments of counsel, and the concurring opinions of Heath and Chambre, JJ., art omitted. — Ed. 158 FENTUM V. POCOCK. [CHAP. IL last person compellable to pay that bill to the holder of it, and that anything could discharge the acceptor, except payment, or a release ; and I never before knew that there was any difference between an acceptance given for accommodation, and an acceptance for value. When I first saw that case in Campbell, I was in the same state as Mr. Justice Gibbs, and doubted a great deal whether it could be law. The case of Collott v. Haigh must be considered, not as a separate decision, but as resting on the authority of the former. It is utterly impossible for any judge, whatever his learning and abilities ma}- be, to decide at once rightly upon every point which comes before him at nisi prias ; and whoever looks through Campbell's Reports will be greatly sur- prised to see, among such an immense number of questions, many of them of the most important kind, which came before that noble and learned judge, not that there are mistakes, but that he is in b} r far the most of the causes so wonderfully right, be3ond the proportion of any other judges. But upon this case we think that we are bound to diff er from him, a nd to hold that it is impossible for us to consider th e ac ceptor of a n accommodation bill in the light of a suret y for the pa y- ment by the dr a wer, and th at we cannot therefore say that he is dis - charged by the indulgence sh own to the draw er. Certainly the paying respect to accommodation bills is not what one would wish to do, seeing the mischiefs arising from them. One might find here a very important distinction between this case and the case decided by Lord Ellenborough ; namely, that here the person taking the bill did not, at the time when he took it, know that it was an accommodation bill ; and if he did not then know it, what does it signify what came 1o his know- ledge afterwards, if he took the bill for a valuable consideration? But it is better not to rest this case upon that foundation, for, as it appears to me, if the holder had known in the clearest manner., ni._t ,h.e time of his taking the bill, that it was merely an accommodation bill, it wo ukl make n o manner of difference ; for he who nonept s fl T->ni , ^i^W fay val ue or to s erve a friend, ma kes himself i n all events l iable, as acceptor, and nothing can fliscnarge him but paym e nt or release. The case before Gibbs, J., lias shaken this decision in Laxton v. Peat, and we think rightly ; the case cited of English v. Darley is not applicable, where the giving time to an acceptor was held to be a discharge of an indorser, who stands only in the situation of a surety for the first. The rule, therefore, which has been obtained for setting aside the verdict and entering a nonsuit must be discharged. Hide discharged. 1 1 Numerous cases in accord with Fentura v. Pocock are cited in 2 Ames, Cases on Bills and Notes, 16, n. 1. To these may be added Bank v. Thomas, 11 Up. Can. C. P. 515; Bank v. Brown, 3 Pugs. & B. 106; Diversy v. Moor, 22 111. 330; Stephens v. Mononghahela Bank, 88 Pa. 157 ; Fourth Bank v. Frazier, 9 Phila. 213. But see contra, Laxton v. Peat, 2 Camp. 185; Ex parte Glendinning, Buck, 517; Hall v. Capital Bank, 71 Ga. 715; Lacy v. Lofton, 26 Ind. 324 (overruling Gordon ». Southern Bank, 19 Ind. 192); Adle v. Metoyer, 1 La. An. 254; Canadian Bank v Coumbe, 47 Mich. 358 : Meggatt v. Baum, 57 Miss. 22. — Ed. SECT. II.] rOOLEY V. HARRADINE. •"^ 159 RICHARD POOLEY r. WILLIAM TIIANG HARRADINE. In the Queen's Bench, February 24, 1857. [Reported in 7 i?//is #■ Blackburn, 431.] Coleridge, J., 1 in this vacation (February 24th), delivered judgment. This was an action by the payee against the maker of three promis- sory notes. The defendant pleaded, by way of equitable defence, that the notes were made by him jointly with John Harradine and Thomas Harradine, and that he made them at the request and for the accom- modation of John Harradine, as the surety only of John Harradine, and to secure a debt due from John Harradine solely to the plaintiff, and without value or consideration ; and that the notes were delivered to the plaintiff, and accepted by him from the defendant, upon an express agreement between them that the defendant should be liable thereon as surety onhy for the said John Harradine ; and that the plaintiff, at the time the notes were made, had notice and knowledge of the same having been so made by him as such surety. The plea then stated that the plaintiff, whilst holder of the notes, without the knowledge or consent of the defendant, for a good and valuable consideration, agreed to give and did give the said John Harradine time for the payment of the notes, and forbore to enforce them ; and that he could and might, had he not given such time, have obtained payment from the said John Harradine. The plaintiff having demurred to this plea, we have to determine whether the facts stated in the plea amount to an equitable defence. At law it seems to have been thought that the discharge of the surety by such giving time to the principal was founded on a variation of the contract between the creditor and the surety ; and if that be so, it necessarily follows (the rule of evidence as to not varying a written contract by parol being the same at law and in equity) that no parol contemporaneous agreement could be allowed to vary the contract in the case of a written instrument. Probably the cases at law would be too strong to make it proper for us, not sitting in a court of error, to decide contrary to the current of authorities on this subject, were we disposed so to do, if the case now before us were that of a legal plea. It is important, however, for the decision of this case, to consider whether, in equity, the doctrine of the discharge of the surety by time given to the principal debtor is confined to cases where the relation of suretyship appears on the original contract between the creditor, the principal, and the alleged surety, or whether an equity does not arise from the relation of the co-obligors or co-promisors inter se, and on the knowledge by the creditor of the existence of that relation. . . . 2 Whether that relation must, according to some of the expressions 1 Only the opinion of the Court is given. — Ed. 2 The Court here discussed Hollier v. Eyre, 9 CI. & F. 1 ; Strong v. Foster, 17 C. B 201 ; and Davies v. Stainbank, 6 D. M. & G. 679. — Ed. 160 POOLE Y V. HARRADINE. [CHAP. II. used by learned judges, have been known to the principal at the time of the original transaction is immaterial with reference to the plea now before us, as it contains an allegation of knowledge by the creditor at the time of the making and receipt of the notes ; but we may remark that there does not appear to have been such knowledge at the date of the original transaction in the case of Stainbank v. Davies ; 1 and ifjthe equity does not depend on an}- contract with the creditor, but on its being u nequitable in m m knowing!}- to prejudice the rights of the surety against the principal, the equity would seem to exte nd to the case of the prin cipal know ing the existence of the relation of suretyship only at the time of his d ealing i n such a ~manner with the principal debtor as to prej udice the rights of the surety. We believe the doctrine laid down in the cases we have cited from the courts of equity is well warranted by the authorities in equity, many of which are collected in the report of the case of Strong v. Foster ; 2 and we think it quite consistent with the principle on which the interfering with the rights of the surety against his principal are founded. The surety, we apprehend, on paying the debt, has always a right to require the creditor to sue, or allow him to sue the principal in his (the creditor's) name ; and if, to use the words of m} r brother Williams in Strong v. Foster, 3 " the cred- itor has voluntarily placed himself in such a position as to be compelled to say he cannot sue him, he thereby discharges the suret}'." He has, on this supposition, knowingly and wrongfully interfered with the posi- tion and rights of the surety. Now, does this right of placing himself, as it is said, in the shoes of the creditor depend on a prior contract between the creditor and surety, or on an implied duty of the creditor not to injure the surety's rights when he knows of the relation sub- sisting between him and his principal? We do not see that by the doctrine asserted in courts of equity the primary liability is at all altered. In_ trut h, the defence, either at law or in equity, does not arise by any al teration of the original co ntract, which indeed it as*su mes a nd relie s on in its original terms. Out that the creditor cannot fairly o r equitably sue the surety wtiere, knowing or tne existence of the rel ation of suretyship, Ue has voluntar ily tied up his hand s from proceeding against the principal. We agree that no defence could be set up by parol which should depend on altering the rights of the creditor on the contract as between himself and the alleged surety as a primary debtor ; as, for instance, by making him liable only on default of the principal, or after a request to him ; but in truth the surety, in most of the cases where the suretyship is apparent on the deed or written in- strument, contracts, not as surety collaterally, but as a principal debtor or covenantor. His being named as surety may operate as proof of notice or knowledge ; but his contract is generally that of primary liability. Thus, in the case of common money bonds, the liability is not collateral, but primary, though in bonds and contracts to indemnify, a 6 D. M. & G. 679. 2 17 Com. B. 201. 3 17 Com. B. 201, 269. SECT. II.] POOLEY V. HARRADINE. 161 it is generally collateral. In the case of rnone}' bonds, where the party is sued as surety, there is no contract as between the surety, obligor, and the obligee of any kind but that which imposes a primary liability ; and it ma}* well be argued that it is immaterial whether the knowledge proceeds from a recital in the instrument or from extraneous facts. We conceive that equity would relieve in the case of a co-obligor in a common money bond being made out to be a surety by extrinsic evi- dence only, if time were given in such a way as to discharge a suretj" in the ordinary case of principal and surety, when the relation of surety- ship appears on the face of the instrument. It may be worth remarking that in Laxton v. Peat, 1 one of the earliest cases on this subject, Lord Ellenborough seems to have proceeded on the ground of the plaintiff having notice of the suretyship when he gave the time, as the plaintiff was the indorsee of the bill, and there does not appear to have been evidence of any agreement between him and the surety. The plaintiff (the indorsee) gave value, but had notice of the circumstances of the original formation of the bill ; and his giving time, with such knowl- edge, discharged the surety, although the suretyship, as regarded the indorsee, depended on no agreement with him. In the more recent cases at law, however, the rule in question has apparently been treated as arising out of the original contract with the creditor ; and if this was a plea of a legal defence, we should probably have felt bound by those authorities, and have left it to a court of error to consider the whole question, taking into their consideration whether the same rule in such matters ought not to exist in courts of law and equity, and to decide, if there be a difference, what the rule should be. As we are, however, called upon to deal with this case as if we were sitting in a court of equity, we think that we ought to decide it according to what we believe to be the doctrine in courts of equity. At the same time we shall not regret if this important subject should now, or on any future occasion, be reviewed in all its bearings by a court of error. We give our judgment for the defendant on the present plea, on the ground that it appears to us sufficiently to state that the relation of principal and surety existed between the defendant and the principal debtor, inter se, and that the plaintiff had knowledge of that fact when the notes were made and received by him, and when he entered into a binding agreement to give time to the principal debtor. Judgment for the defendant? 1 2 Camp. 185. 2 Taylor v. Burgess, 5 H. & N. 1 ; Greenough v. McClelland, 2 E. & E. 424 ; Mut. Assoc, v. Sudlow, 5 C. B. n. s. 449 ; Swire v. Redman, 1 Q. B. D. 536 ; Maingay v. Lewis, Ir. R. 5 C. L. 229, Accord. In Swire v. Redman, supra, Cockburn, C. J., said (p. 541): "The relation of principal and surety gives to the surety certain rights. Amongst others the surety has a right at any time to apply to the creditor and pay him off, and then (on giving proper indemnity for costs) to sue the principal in the creditor's name. We are not aware of any instance in which a surety ever in practice exercised this right; certainlv the cases in which a surety uses it must be very rare 11 162 EWIN V. LANCASTER. v EWIN v. LANCASTER. In the Queen's Bench, May 29, 1865. [Reported in 6 Best t j- Smith, 571.] M0*"" Cockburn, C. J. 1 The plaintiff is the holder of bills of exchange accepted by the defendant for the accommodation of Bnrtwell, the drawer, and after they became due he entered into an agreement with Burtwell, that if Bnrtwell would give him a mortgage security on real estate he, the holder, would cancel the bills and release all parties from liability upon them. That is the state of facts on the findings of the jury. 2 The third plea is not made out to the full extent ; but in order that justice might be done I reserved power to the Court to amend it, if necessary ; and, the Court having power to add a plea, I think such a plea might be put on the record as would establish a defence on equitable grounds. In Bailey v. Edwards 3 it was held that Still, the surety has this right. And if the creditor binds himself not to sue the prin- cipal debtor, for however short a time, he does interfere with the surety's theoretical right to sue in his name during such period. It has been settled by decisions that there is an equity to say that such an interference with the rights of the surety — in the immense majority of cases not damaging him to the extent even of a shilling — must operate to deprive the creditor of his right of recourse against the surety, though it may be for thousands of pounds. But though this seems — if it may be permitted to speak in such terms of the doctrine sanctioned by very great lawyers — consistent neither with justice nor common sense, it has been long so firmly established that it can only be altered by the legislature. And as it depends on ti n- supposed inequity o f inte rfering with the rights which the surety has as between him and jthe principal debtor, it is not material tnat tl ie knowledge on the part of the creditor that the surety was from the beginning such, and therefore naci such rights, was not acquired till after the surety ha d become liable to t he credito r/' In England, Maryland, and JNew Jersey, where a principal and surety are co-makers of a note, aud the holder, with knowledge of the suretyship, agrees to give time to the principal, the surety has no common-l a w defenc e to an action on the note. Manley v. Boycott, 2 E. & B. 46 ; Yates v. Donaldson, 5 Md. 389 ; Anthony v. Fritts, 45 N. J. 1. But generally in this country the surety's defence under such circumstance^ , is allowed at law a s well as jp pqnity. See, in addition to the numerous citations in 2 Ames, Cases on Bills and Notes, 82, n. 2, the following cases to the same effect: Vary v. Norton, G F. R. 808 ; Scott v. Scruggs, 60 F. R. 721 ; Capital Bank v. Real, 62 Cal. 419; Buck v. Smiley, 64 Ind. 431; Arms v. Beitman, 73 Ind. 85 (semble) ; Kales v. Hise, 79 Ind. 301 ; Sample v. Cochran, 84 Ind. 594; Corielle v. Allen, 13 Iowa, 289 ; Lanman v. Nichols, 15 Iowa, 161 ; Piper v. Newcomer, 25 Iowa, 221 ; Wend- ling v. Taylor, 57 Iowa, 354; Lambert v. SheHer, 71 Iowa, 463; Calloway v. Snapp, 78 Ky. 561 ; Andrews ». Marrett, 58 Me. 539; Guild v. Butler, 127 Mass. 386; Gano v. Heath, 36 Mich. 441 [semble) ; German Association v. Helmrick, 57 Mo. 100; Still- well v. Larou, 69 Mo. 539; Welfare v. Thompson, 83 N. Ca. 276; Calvert v. Good, 95 Pa. 65 ; First Bank v. Skidmore, Tex. Ap. '95, 30 S. W. R, 564 ; Irvine v. Adams, 48 Wis. 468; Moulton v. Posten, 52 Wis. 169. — En. 1 Only the opinions of the Court are given. — Ed. 2 The jury found that the plaintiff kuew, when he took the mortgage security, thai the defendant was an accommodation acceptor. — Ed. 3 4B. & S. 761. SECT. II.] EWIN V. LANCASTER. 163 the giving time to a prior indorser of a bill of exchange discharged an accommodation acceptor ; the principle on which that decision was founded being, that the parties to an accommodation acceptance stand in the relation of principal and surety. Where one is surety for another and the creditor gives time to the principal debtor the surety is dis- charged ; for if the surety pays the debt he is entitled to sue the debtor in the name of the creditor in order to recover back from him the money he has paid. In the present instance, if the accommodation acceptor had gone to the holder of the bills, and in order to get posses- sion of them had proposed to him to pay them with the view to enforce in the name of the creditor the liability of the drawer to repay him what he had so paid, the holder could not have given them up to him ; for he had entered into an agreement to cancel them. And as soon as he put it out of his power to deliver up the bills to the acceptor on payment of their amount, he deprived the accommodation acceptor of his right as surety to recover from the principal debtor. On that ground, as well as on the authority of Bailey v. Edwards, 1 I am of opinion that the plaintiff has discharged the surety, and therefore the rule should be made absolute. Crompton, J. Originally the cases at law were extremely strong that the position of parties to a bill of exchange or promissory note could not be reversed by making the party who appeared on the face of the instrument to be the principal debtor surety for the other. The} 7 proceeded on the principle that parol evidence is not allowed to alter a written contract : that principle is a sound one, and has governed many cases in Courts of law. But cases in equity establish that when on e or both of two parties to an instrument are pri marily liable, as in t he i nstance of a comm on bond where several join as obligors, and tlTe creditor may sue any one of them at an}' time, it is competent for hi m t o show t hat the re lation o f principal and surety exists bet ween the parties. Lord Cottenham, in Hollier v. Eyre, 2 referred to in Pooley y. HanacTine, explained that the doctrine on which the courts of equity proceed arose from its being inequitable that the creditor should pre- judice the rights of the surety against the principal. In Strong v. Fos- ter, 3 which was after pleas on equitable grounds had been introduced, the evidence failed to support the equitable defence, and it was not necessary to pronounce an opinion on the validity of it. In Pooley v. Harradine, this Court upheld a plea on equitable grounds, which stated that the defendant made the note jointly with A as surety only for him, of which the plaintiff had notice at the time, and that the plaintiff gave time to A without the defendant's knowledge. That decision was adopted by the Court of Exchequer in Taylor v. Burgess, 4 and was held to be law by the Exchequer Chamber in Greenough v. McClelland. 5 But P oole} 7 v. Harradine left one matter in doubt, viz.. 1 4B. &S. 761. 2 9 C1 . & -p. 1,45. 3 17 C. B. 201. * 5H. &N. 1. 6 2 E. & E. 424, 429. 164 ROUSE V. BRADFORD BANKING CO. [CHAP. II. whether the cr editor must have had notice of the suretyship at the time of taking the notes, or whether notice a t the time of the dealin g tillered to amount to :i discharge of the surety was sufficient. That case came before this Court in Bailey v. Edwards, 1 which is~very anal- ogous to the present ; and the law accuratel}' laid down by m}- brother Blackburn in that case, applies here. There the plaintiffs, when they executed the deed by which time was given, had notice that the bill was accepted for the accommodation of their debtor ; and that is the time to b e looked at, because it is the time when the equity arises. It is clear that a creditor is not bound 10 sue either the principal or the surety ; no delay in suing the surety will prejudice him, but he must not make a binding agreement by which he ties up his hands from suing the principal ; if he does so the surety is discharged, on the principle explained by Williams, J., in Strong v. Foster. 2 Here the plaintiff made a contract with the principal upon good consideration to give up the bills to be cancelled. Whether that is a waiver of the right of action against the surety may be doubtful ; for a waiver can only be to the party himself who relies upon it. But by that contract the plaintiff for a good consideration tied up his hands from suing the principal debtor. It ma} r be shown by parol evidence that in the trans- action between the creditor and his debtors, according to truth and for the purposes of equity, one of the debtors was suretj' for the other ; and then the creditor is within the rule by which, if he gives time to the principal debtor, the surety is discharged. Shee, J., concurred. Hide absolute. 6 ROUSE v. THE .BRADFORD BANKING COMPANY. / ' ■ 73CL. "$ *"h ^-*<^-^^^i*c - In the House of Lords, July 30, 1894. [Reported in [1 894] Appeal Cases, 586.] Lord Herschell, L. C. 4 My Lords, the appellant, who was the plaintiff in the action, was formerly in partnership with certain other persons carrying on business as worsted spinners under the firm of William Rouse & Co. The partnership between them was dissolved by a deed of the 17th of April, 1885. By that deed William Rouse was to cease to carry on the business, and the other members of the firm, John Frederick Rouse, Frank Rouse, and Herbert Rouse, were to continue to do so. By that deed also the debts of the firm were to be i 4B. &S. 761. 2 17 C. B. 201,219. 3 Davies v. Stainbank, 6 D. M. & G. 679 ; Bailey v. Edwards, 4 B. & S. 761 ; Oriental Corp. v. Overend, 7 Ch. 142, 348 (overruling Ex parte Graham, 5 D. M. & G. 356) ; Valley Bank v. Meyers, 17 N. B. R. 257 ; Westervelt v. Freeh, 33 N. J. Eq. 451; Shelton v. Hurd, 7 R. I. 403, Accord. — Ed. 4 Only the opinions of the judges are given. — Ed. SECT. II.] HOUSE V. BRADFORD BANKING CO. 165 paid by the new partnership, who were to take over its assets, and the}' covenanted with William Rouse, the retiring partner, to indemnify him against those debts. The covenant contained a proviso to which I will call attention presently. My Lords, at the time of the dissolution, amongst the debts owing was a debt of upwards of £50,000 to the Bradford Banking Company, in which the appellant was a shareholder. At the time when the new firm failed, some years afterwards, the debt had been reduced below £50,000, but a considerable amount was still owing to the bank, and this action having been brought to establish the appellant's claim to his shares free from any lien, the respondents sought by counter-claim to enforce their right to hold William Rouse's shares as securit}' for the debt. The answer to this claim was that William Rouse had been dis- charged from all his liability to the bank b}' reason of transactions between the bank and the new firm. The case was put in this way • that upon the dissolution of the firm under the deed which I have men- tioned, the continuing partners became as between themselves the prin- cipal debtors, and William Rouse merely a suret}' for them ; and that inasmuch as the bank had notice of the deed of dissolution and its terms, it was brought to the knowledge of the bank that this was the relation of the parties after that date. Then it was said that the bank thus knowing that William Rouse had become surety onl}' as be- tween him and his former co-partners, gave time to the continuing members of the firm for the payment of the debt in question, and so discharged William Rouse. It was contended indeed alternatively, that there had been a novation, and that the bank had accepted the nev firm as their debtors in place of the co-debtors who had previously been liable to them, and that, by this novation, William Rouse was discharged. That argument has not found favor with an}' of the learned judges before whom the case has come, and your Lordships .have already intimated that, in 30111* opinion, it cannot be supported. My Lords, with regard to the question whether time was given so as to discharge the surety, the general principle of equity was not con- tested that where there is a contract with two persons, one as principal and the other as surety, and time is given to the principal without the assent o f the surety, and withou t the rights against t he suretv being reserved, the right against the surety is extinguished ; but it was sa id to be inapplicable to such a case as th e present where those who as~be t weeiithemselvcs became principal and surety had been originally bot l of them prin cipal debtors to the credito r. On the other hand, it was contended that this made no difference and that the rule of equit}' was as applicable to a case where two having both been principal debtors, one afterwards became, with notice to the creditor, a surety, as it was to a case where the contract with the credi- tor was one of principal debtor and surety. Reliance was placed for this proposition upon the case of Oakeley v. Pasheller, 1 decided in this 1 4 CI. & F. 207 ; 10 Bli. (N. S.) 548. 166 ROUSE V. BRADFORD BANKING CO. [CHAP. II. House. That case has been very much discussed, and inasmuch as I believe all your Lordships have formed a clear opinion upon the argu- ment which has been addressed to you on that point, it is probably well to express it, although the decision in this House does not turn upon the conclusion arrived at with regard to Oakeley v. Pasheller. 1 In Oakeley v. Pasheller, 1 Lord Lyndhurst, in delivering judgment, said this : " Now in consequence of an arrangement which took place between the representatives " (that is the representatives of the de- ceased partner) "• and the new partnership " (in that case an additional partner was taken in when one of the partners died) " they stood in the character of sureties : and the principle of law is this, that where a creditor gives time to the principal, there being a surety, without any communication with the surety, and without the consent of the surety, it discharges him from liability because it places him in a new situation and exposes him to risk and contingencies which he would not other- wise be liable to." The proposition is there laid down in terms quite unequivocal by Lord Lyndhurst affirming Lord Brougham as Lord Chancellor and the Master of the Rolls. My Lords, it was suggested, in the case of Swire v. Redman, 2 that the judgment in Oakeley v. Pasheller 1 turned upon the fact that the creditor had been a part}' to an arrangement by which the represen- tatives of the deceased partner were, as between him and them, to be sureties only. I cannot myself find any trace of such an arrangement as being the foundation, in airy respect, of the judgment of Lord Lyndhurst. In the case of Overend, Gurney & Co. v. Oriental Financial Corpo- ration 3 before Lord Hatherley when Lord Chancellor, he referred some- what elaborately to the facts in Oakele}' v. Pasheller, 1 and he said : "There is really in substance no hardship; and that is one reason why I dwelt at some little length to show that it was not a doctrine which was at all shaken by the right of th"e creditor to preserve his remedies against the surety ; and if there was an}' small hardship, they could have freed themselves from that hardship and all difficulty what- ever. A person conies and tells them that since the debt was con- tracted circumstances have arisen by which he is in fact surety and the other debtor is the principal debtor. Thereupon all that they have to do is to give the principal debtor time and reserve their rights against the surety." It is quite clear, from the language used in the earlier part of the judgment, that Lord Hatherley considered he was really following the principle laid down in Oakeley v. Pasheller. 1 The case of Overend, Gurney & Co. v. Oriental Financial Corporation 3 was this : that two persons had appeared to the creditor, at the time the contract was entered into, to be both principal debtors, and he afterwards ob- tained notice of the fact that one of them was a surety only. It was held that when once he had received that notice he could not 2:ive time 1 10 Bli. (N. S.) 548, 590. 2 1 Q. B. D. 536. 3 Law Rep. 7 Ch. 142; 41 L. J. (Ch.) 332, 336. SECT. II.] ROUSE V. BRADFORD BANKING CO. 167 to the one who, as between themselves, was the principal debtor, with- out discharging the surety. My Lords, that case caine before this House on appeal from the decision of Lord Ilatherley as Chancellor, and the judgment was affirmed. Lord Cairns said : 1 " My Lords, it appears to me that after the case which was referred to at the Bar, decided by }-our Lordship's House, of Oakeley v. Pasheller, 2 it is impossible to contend if after a right of action accrues to a creditor against two or more persons, he is informed that one of them is a surety only, and after that he gives time to the principal debtor without the consent and knowledge of the surety, that under those circumstances the rule as to the discharge of the surety does not apply. That is a distinct and clear expression of opinion as to the limits and the grounds of decision in Oakeley v. Pashel- ler,' 2 and it is in accordance with the view which I have myself formed of that case. And in this House, as I have said, the decision of Lord Ilatherley was affirmed, and therefore the proposition was actually applied in a case where the two debtors had both been believed to be principal debtors by the creditor at the time the contract was entered into. My Lords, I own I am quite unable to see any distinction, even if Oakeley v. Pashelier 2 did not exist, between that case in the House of Lords and the present. If, notwithstanding that both the debtors ap- peared to be principal debtors, the knowledge afterwards that one of them is a surety only disentitles you to deal with the other in the way of giving time without discharging that debtor, t hen it seems to me it must equally be the case ( for otherwise t here would be a distinc tion, r esting on no intelligible or s olid bas is), that where, althou g h hot h _are principal debtors at th e time, one of them af terwards, as between him- s elf and his c o-debtor, becomes a surety, th at one is discharged if tim e be given to the other. . . . A Lord Watson. My Lords, when two or more persons bound as full debtors arrange, either at the time when the debt was contracted, or subsequently, that, inter se, one of them shall only be liable as a surety, the creditor after he has notice of the arrangement must do nothing to prejudice the interests of the surety in any question with his co-debtors. That appears to me to be the law as settled by the judgments of this House in Oakeley v. Pasheller, 4 and Overend, Gurney & Co. v. Oriental Corporation. 5 Order appealed from affirmed and appeal dismissed with costs. 9 1 Law Rep. 7 II. L. at p. 360. 2 10 Bli. (N. S.) 548, 590. 3 The Lord Chancellor here discussed the documentary evidence in the case, and concluded that there was in fact no binding agreement of the creditor to give time to those who had become the principal debtors. Lord Watson was inclined to take the same view on this point. — Ed. * lOBli. (N.S) 548. 5 L. R. 7 H. L. 348. Lord Ashbourne, Lord Macnaghten, and Lord Morris concurred. — Ed. 6 Oakley v. Pasheller, 4 CI. & F. 207, 10 Bligh, N. S. 548 s. c. ; Oakford v. Euro- pean Co., 1 H. & M. 182 (semble); Oriental Corp. v. Overend, L. R. 7 H. L. 348, 360. 168 « m. MUKKAY V. MARSHALL. SUSAN E. MURRAY and Others, Executors, Respondents, v. PHEBE MARSHALL,, Appellant. -X, - ***»***+ | -^^i *^*~ ^y> g "" ^T£?7 In the Court or Appeals, New York, February 8, 1884. [Reported in 94 A 7 ew York Reports, 611.] Appeal from order of the General Term of the Supreme Court in the second judicial department, made December 12, 1882, which re- versed a judgment in favor of defendant, entered upon a decision of the Court on trial without a jury. This action was upon a bond executed by defendant to plaintiffs' testator. The answer averred, and the Court found in substance, that at the time the bond was executed, a mortgage was also executed by defendant to secure the payment thereof; that thereafter defendant sold and conveyed the mortgaged premises subjec t to said mortgage ; that plaintiff's testator, in consideration of the payment to him by the grantee of $500 of the principal and of the interest due upon the bond and mortgage, executed and delivered to said grantee, without the knowledge or assent of defendant, an instrument under seal, extend- ing the time of payment of the balance unpaid for three years, whereby the answer claimed, and the trial court found defendant was released and discharged from all liabilit}*. Henry D. JBirdsall, for appellant. Josiah T. Marean, for respondents. 1 per Lord Cairns; Wilson v. Lloyd, 16 Eq. 60; Vary v. Norton, 6 F. R. 808; Home Bank v. Waterman, 134 111. 461, 467; Williams v. Boyd, 75 Ind. 286 (semble) ; M'Taggart v. Dolan, 86 Iud. 314 (semble) ; (but see Fensler v. Prather, 43 Ind. 119) ; Smith v. Sheldon, 35 Mich. 42 ; Cornwell v. Megins, 39 Minn. 407 (semble) ; Patterson v. Camden, 25 Mo. 13 (semble) ; Millerd v. Thorn, 56 N. Y. 402 ; Colgrove v. Tallman, 67 N. Y. 95; Palmer v. Purdy, 83 X. Y. 144 (semble); Thurber v. Corbin, 51 Barb. 215 (semble) ; Morrison v. Perry, 11 Hun, 33 (semble) ; Dodd v. Dreyfus, 17 Hun, 600 ; Main v. Canavan, 8 Daly, 272 ; Hall v. Johnston, 6 Tex. Ap. 110 ; Gates v. Hughes, 44 Wis. 332 (semble) ; Maingay v. Lewis, Ir. R. 5 C. L. 229 (reversing s. c. Ir. R. 3 C. L. 495) ; Mathers v. Halliwell, 10 Grant, Ch. 172 ; Blackley v. Kenney, 19 Ont. Ap. 169 (compare Aldous v. Hicks, 21 Ont. Ap. 95) ; Bailey v. Griffith, 40 Up. Can. Q. B. 418 (but see Birkett v. McGuire, 7 Ont. Ap. 53, and Allison v. McDonald, 23 Ont. Ap. 288, 20 Out. Ap. 695), Accord. " Swire v. Redman, 1 Q. B. D. 536 (overruled) ; James v. Day, 37 Iowa, 164; Raw- jp X^'son v. Taylor, 30 Ohio St. 389 (semble) ; Barnes v. Boyers, 34 W. Va. 303, Contra. — Ed. fi/^^ _»«*•■» • On the same principle, if a mortgagor sells the property subject to the mortg age, ■ receiving the purchaser's promise to assume the payment of the mortgagor, acid the ortgagee, with knowledge of tins assumption, agrees with the purchaser t o ex tend le time of payment, the mortgago r, being in effect a sure ty, will be discharge d. Union Co. v. Harford, 143 U. S. IB" (but see" "Keller v. Ashiord, 133 U. is. 610) ; George v. Andrews, 60 Md. 26 ; Chilton v. Brooks, 72 Md. 554 (semble) ; Dedrick v. ^fcBlyker, 85 Mich. 475 ; Calvo v. Davies, 73 N. Y. 211 ; Fish v. Hayward, 28 Hun, 456 ; Commercial Bank v. Wood, 56 Mo. Ap. 214; Wayman v. Jones, 58 Mo. Ap. 313 (re- pudiating Conn. Co. v. Mayer, 8 Mo. Ap. 18). But see contra, Corbet v. Waterman, 11 Iowa, 86; James v. Day, 37 Iowa, 164 — Ed. 1 The arguments of counsel are omitted. — Ed. &^, SECT. II.] MURRAY V. MARSHALL. 1G9 Finch, J. The trial court held, that the extension by plaintiffs' testator of the time of payment of defendant's bond and mortgage, by a valid agreement with her grantee, who had taken a deed subject to the mortgage but without assuming its payment, operated to dis- charge the defendant wholly from liability. This conclusion rested upon the rule applicable to principal and surety, which forbids the former to change the essential terms of the contract without the con- sent of the latter, except at the peril of the surety's complete dis- charge. In most of these cases the Courts have refused to enter upon the inquiry whether the surety was damaged or not by the change, and the justifica tion o t such refusal ordinarily lies in the fact that the surety is bou nd onl y by the contract which he made, and not by th e new and substitute d one which alone can be legally enfor ced. Ducker v. Rap p. 1 But the present is not a case of principal and surety in the strict and technical definition of such relation ; and upon that fact the General Term founded a different view of the rights of the parties, and reversed the decision of the Special Term on appeal. Conceding that, by the conveyance subject to the mortgage, the land became the primary fund for the payment of the mortgage debt, and that the grantor in defence of his liability on the bond had the right to pay the mort- gage debt and be subrogated to the remedies of the creditor, and so could enforce payment out of the land to the extent of its value, (John- son v. Zink, 2 Flower v. Lance, 3 ) the General Term nevertheless held, affirming the authority of Penfield v. Goodrich, 4 that the mortgagor and grantor was all the time the principal debtor, and the grantee onby became such when he covenanted to pay the mortgage debt and assumed it as a personal liability. We do not approve of this con- clusion, or the result to which it leads, and deem it our duty to affirm the decision of the Special Term, although not approving the doctrine upon which it rests, except with some necessaiy qualification. While, as we hav e said, no strict and tec hnical relntinn nf pritjeipal and sure t }~ ar ose between the mortgagor and his grantee from t he con- veyance subjec t to the mortg age, an equity did arise which could not be taken" from t he mortgagor with out hi s ennspnt ,, «"ri mWh_hoana a very closl' 1'L'se mblance to the equitab le ri ght of a surety, the terms of whose contract have been modified. We cannot accurately denominate the grantee a principal debtor, since he owes no debt, and is not per- sonally a debtor at all, and yet, since the land is the primary fund for the payment of the debt, and so his property stands specifically liable to the extent of its value in exoneration of the bond, it is not inaccu- rate to say that as grantee, and in respect to the land, and to the ex- tent of its value, he stands in the relation of a principal debtor, and to the same extent the grantor has the equities of a surety. This follows inevitably from the right of subrogation which inheres in the original contract of sale and conveyance. It is a definite and recognized right, 1 67 N. Y. 473. 2 51 N. Y. 3.36. 8 59 Id. 603. 4 10 Huu, 41. 170 MURRAY V. MARSHALL. [CHAP. IL which, in the absence of an express agreement, will be founded upon one implied. Gans v. Thieme. 1 When the mortgagor in this case sold expressly subject to the mortgage, remaining liable upon his bond, he had a right as against his grantee to require that the land should, first be exhausted in the payment of the debt. Presumably the amount of the mortgage was deducted from the purchase-price, or at least the transfer was made and accepted in view of the mortgage lien. Seller and buyer both acted upon the understanding that the land bound for the debt should pay the debt as far as it would go, and their contract necessarily implied that agreement. Through the right of subrogation the vendor could secure his safety, and that right could not be invaded with impunity. It was invaded. When the creditor extended the time of payment by a valid agreement with the grantee, he at once, for the time being, took away the vendor's original right of subrogation. He suspended its operation beyond the terms of the mortgage. He put upon the mortgagor a new risk not contemplated, and never con- sented to. The value of the land, and so the amount to go in exoner- ation of the bond, might prove to be very much less at the end of the extended period than at the original maturity of the debt, and the latter might be increased by an accumulation of interest. The creditor had no right thus to modify or destro}* the original right of subro- gation. What he did was a conscious violation of this right, for the fact that he dealt with the grantee for an extension of the mortgage shows that he knew of the conveyance, and that it left the land bound in the hands of the grantee. Knowing this, he is chargeable with knowledge of the mortgagor's equitable rights, and meddled with them at his peril. But it does not follow that the vendor was thereb}' wholly discharged. The grantee stood in the quasi relation of principal debtor only in respect to the land as the primary fund, and to the ex- tent of the value of the land. If that value was less than the mort- gage debt, as to the balance he owed no duty or obligation whatever, and as to that the mortgagor stood to the end, as he was at the beginning, the sole principal debtor. From any such balance he was not discharged, and as to that no right of his was in any manner dis- turbed. The measure of his injury was his right of subrogation, and that necessariby was bounded b} r the value of the land. The extension of time, therefore, operated to discharge him only to the extent of that value. At the moment of the extension his right of subrogation was taken away, and at that moment he was discharged to the extent of the value of the land, since the extension barred his recourse to it, and once discharged he could not again be made liable. From that moment the risk of future depreciation fell upon the creditor who b} r the ex- tension practically took the land as his sole security to the extent of its then value, and assumed the risk of getting that value out of it in the future. But the Special Term went further and held that the mort 1 93 N. Y. 232. SECT. II.] METZ V. TODD. 171 gagor was absolutely discharged by the extension. That might or might not be, and depended upon the question whether the value of the land equalled or fell below the debt. For conceding the general r ule that the surety is discharged utterly by a valid extension of the time of payment, and that the mortgagor stands in the position and has th e rights of a surety, it must be steadily remembered that he can only be discharge d so far as he is surety ; that he holds that position only u p to the v alu e of the lan d ; a nd beyond that is still principal debtor without a ny remaining equities. . . - 1 The judgment of the General Term should be reversed and that of the Special Term affirmed with costs. All concur. Judgment accordingly* ^?Se^TJb:.r MARY METZ v. HELEN G. TODD and Others. In the Supreme Court, Michigan, June 6, 1877. [Reported in 36 Michigan Reports, 473.] Appeal in Chancery from Calhoun Circuit. E. Baxter and J. G. Post, for complainants. Severens, Boudeman & Turner, for defendants. Cooley, Ch. J. This is a foreclosure suit. The mortgage was given by defendants Helen G. Todd and Alice M. Terry, to secure the pay- ment of four promissory notes made by third persons, and which the mortgagors had delivered to complainants on a purchase of the land mortgaged. The bill avers that the four notes were delivered to the complainants " as security for the payment of the purchase price," and that th e m ortgage was taken at the same time to secure the paymen t of the note. s. It is claimed by the defence that the notes were received in payment for the land, and that the purchasers were not to be looked to for payment except upon the mortgage and according to its condi- tions. The evidence satisfies us that this defence is well founded. It is also claimed on the part of the defence that on the only note now remaining unpaid, and which was made by one Frink, the mort- gagees, for a consideration paid to them, and without the knowledge of the mortgagors, extended the time of payment. T he mortgagors then i nsist that, though not personally at a ny time liable as sureties, 3'et as owners of the mortgaged land the}- occupied that position, and con se-~ quently the extension granted to the principal debtor, without their 1 The Court here considered the evidence, and inferred that the value of the land equalled the amount 6f the mortgage debt. — Kd. - lravers v. Dorr (Minn., 1895), 62 N. W. R. 269, Accord. Shepherd v. May, 115 U. S. 505 (semble) ; Keller v. Ashford, 133 U. S. 610, 625. (semble; but see Union Co. v. Harford, 143 U. S. 187, 190) ; Chilton v. Brooks, 72 Md 554 (semble), Contra. — Ed. 172 FEAZEK V. JOKDAN. [CHAP. II. consent, discharged the land from the mortgage lien. That the claim is well founded if the proof establishes the extension, we think is un- doubted. Neimcewicz v. Gahn, 1 and Gahn v. Niemcewicz, 2 Christner v. Brown. 3 We also find the facts to be in accordance with the theory of the defence. The decree must be affirmed, ivith costs. The other Justices concurred. 4 J*%**&^ J£*~ **<— ^ [Reported in 2 Simons, 12.] ^^" '^Le^C ^^2—-p ^p4<— A motion was made, in this cause, for an injunction to restrain the defendant, the administrator of Catherine Coles, deceased, from pro- ceeding in an action which he had commenced against the plaintiff for . S"* *N , recovering money due on a bond given to the deceased, in which the Z£*^ plaintiff had joined, as surety, with one Burckhardt. The facts ad-"" a a mitted by the answer, and relied upon in support of the motion, were " that in June, 1817, Catherine Coles had commenced an action upon . - the bond against Burckhardt, and on the 23d of that month, without the plaintiff's privity, took a cognovit from him for the amount of the debt, with a stipulation that no judgment should be entered up or exe- cution issued until the 1st of August following. The plaintiff insisted that this proceeding was a giving of time to the principal, which dis- charged him, the surety, from all liability under the bond. 31r. Shadicell and Mr. Whitmarsh, in support of the motion. Mr. Sugden and Mr. Campbell, for the defendant. A surety is never discharged by the delay of the creditor in suing 1 the principal debtor, unless the creditor makes an agreement with the/ principal by which he is prevented from suing him. In this case the creditor's remedy against the principal was never lost, nor were his hands tied for a m oment ; by the arrangement the remedies of the surety were not diminished or attected in any manner. It i s clear that, in the usual course, judgment could not have been obtained in the action until long alte r the_l st of Augu st, and therefore the period for getting_the benefit of the action has been shortened, and not extende d. Prender- Samuell v. Howarth, Dave}' v. Prendergrass, Boultbee gasT v. Devey Stubbs. 2 1 Badnall v. Samuel, 3 Price, 521 ; Vernon v. Turley, 1 M. & W. 316 ; Mueller v. Dobschuetz, 89 111. 176; Sohier v. Loring, 6 Cush. 537, 544; Harnsberger v. Geiger, 3 Grat. 144, Accord. — Ed. 2 18 Ves. 20, see 26. 12 178 PRENDEKGAST V. DEVEY. [CHAP. IL The Vice Chancellor. The principle of discharging a surety by the giving of time b} - the creditor, is a refinement of a court of equity, and I will not refine upon it. By the arrangement complained of, time was not given, but the remed}' was accelerated. Motion refused. 1 PRENDERGAST and Another v. DEVEY and Others. In Chancery, Before Sir John Leach, V. C, December 7, 1821. [Reported in 6 Maddoch, 124.] This was a bill b}' sureties, to restrain an action against them upon a surety bond, and to have the bond delivered up, upon the ground that the creditors had given time to the principal debtors without the sureties' consent. The facts appearing in the pleadings, and by a further statement agreed upon between the parties at the request of the Court, were these : In September, 1818, the plaintiffs, as sureties for two persons of the name of Prendergast, coal merchants, became bound to the de- fendants, who supplied the Prendergasts with coals wholesale, in a penalty, conditioned to be void if the plaintiff should, within one month after demand on them, pay such balance or sum of mone}' not exceed- ing £500 as should become due to the defendants upon settlement of accounts between them and the Prendergasts. In June, 1819, it being alleged a balance of £1,099 was due from the Prendergasts to the defendants, the latter, without communi- cating with the plaintiffs, took from the Prendergasts a warrant of attorney for the amount, with a stay of execution if they should dis- charge the debt by instalments of £100 a month, and on default, exe- cution was to issue for the whole. The first instalment under the warrant of attorney having fallen due on the 21st of July, and not being paid, the defendants, on the 7th of August following, made a demand on the plaintiffs according to the terms of the bond, and in the succeeding Michaelmas Term brought the present action, which the bill sought to restrain. 2 Mr. Wilson and Mr. Moots, for the plaintiffs. Mr. Hart and Mr. Rose, for the defendants. The Vice Chancellor expressed his opinion that the warrant of attorney certainly gave time, which might have discharged the sureties 1 Price v. Edmunds, 10 B. & C. 578; Suydam v. Vance, 2 McL. 99 ; Fletcher v. Gamble, 3 Ala. 335; Barker v. McClure, 2 Blackf. 14; Gardner v. Van Norstrand, 13 Wis. 543, Accord. — Ed. 2 The statement of the case and the arguments of counsel are abridged. — Ed. SECT. II.] KIRBY V. LANDIS. 179 if they had been affected by it ; but that here the sureties' liabilit}- not arising till demand, and previous to the demand default having been actually made by the debtors, so that execution might have instantly issued for the whole debt, the agreement made by the warrant of attorney was at an end, and the defendants were no waj'S injured, as there was nothing to interfere with their immediate recourse to the principal debtors. The plaintiff's counsel then pressed upon the Court, that as the time of making the demand was entirely in the option of the creditors, it was unjust the}' should be permitted, while withholding it, to deal with the debtors as they thought proper, until the sureties' recourse to the debtors might be defeated in effect, although not legallj' gone ; but his Honor thought the terms of the engagement, though singular and im- provident, bound him to the construction he had put upon it, and dismissed the bill. .__ „ ^ KIRBY v. LANDIS and In the Supremk^Court, Iowj , s^^ErZ^I ~\ll>i»irt 180 HUBBAED V. HAKT. [CHAP. II. Landis at or before its maturity, as aforesaid, lulled these defendants into security, and led them to believe said note paid by said Landis, and being so misled by plaintiff's acts in the premises they took no thought or action as to their indemnity against said Landis." They do not expressly aver that they had knowledge of the surrender, but we think that it is necessarily to be implied that they had from the aver- ment that the surrender lulled them into security. The plaintiff insists that the sureties were not affected except so far as they might be deemed to be so by simple forbearance to sue. This would be true if they had no knowledge of the surrender, but in such case it would not be true, as averred, that they were lulled into security by the surrender. If the plaintiff had told them that the note had been paid they would certainty have been justified, in the absence of all knowledge to the contrary, in assuming the plaintiff's statement to be true, and in gov- erning themselves accordingly. The surrender of the note was equiva- lent to a declaration that it had been paid or satisfied in some way, and if the fact of the surrender came to the knowledge of the sureties it was equivalent to a declaration made to them that the note had been paid or satisfied in some wa}\ "We think, therefore, that under the averments of their answer they must be deemed to have been prejudiced. I t is true , they mi ght not in fact have protected them - selves if the note had not been surrendered. But it was not incum- ^ /? benl upon the til c o av er wtiat tney would nav e done. It was su fficient to aver that they might have protected themselves but for the surren- der, and lost the op portunity of doing so by re ason of it . In our opinion the answer showed a good defence, and the plaintiff's demurrer to it should have been overruled. Reversed. =V , HUBBARI HUBBARD v. HART and Another. In the Supreme Court, Iowa, June 14, 1887. [Reported in 71 Iowa Reports, 668.] Action on a promissory note on which defendant is surety. Verdict and judgment for plaintiff", and defendant appeals. Temple & Phelps, for appellant. R. G. .Phelps, for appellee. Reed, J. The defences pleaded are (1) that there had been an extension of the time of pa3 r ment of the debt by a contract between plaintiff and the principal debtor, without the knowledge or consent of defendant. 1 1 Only what relates to this plea is given. — Ed. SECT. II.] MOULTON V. POSTEN. 181 I. The note in suit was given on the eighteenth of August, 1882, and became due in six months from that date. When it matured, Hart, the principal maker, desired an extension, and he presented to plaintiff a new note, signed by himself, and to which defendant's name was also signed, which plaintiff accepted, and he surrendered the former note. At the maturity of this note, Hart again presented a note to which defendant's name was signed, and secured a second extension. But it afterwards transpired that he had forged defendant's signature to both of these instruments. That fact was not discovered by plaintiff until he sought to collect the third note from defendant after its maturity. As the surrend er o f the original n ote a nd the extension s of time were /4CL&' — */ obtained byj raud, the noie__ffia§ not extinguish ed by t he surrender* "- — Nor was the surety discharged by the extensions of _time. Kirby v. Landis. 1 MOULTON v. POSTEN. In the Supreme Court, Wisconsin, April 19, 1881. [Reported in 52 Wisconsin Reports, 169.] Appeal from the Circuit Court for Fond du Lac Count} 7 . Action upon the joint promissory note of the defendant and one B. C. Smith. Lyon, J. 2 The learned judge of the Circuit Court ordered judgment dismissing the action, on the grounds, (1) that the plaintiff, b} r his agent, extended the time of payment of the note at the request of Smith, the maker, for whose debt it was given, without the consent of the defendant Posten, and with knowledge that the latter signed it for the accommodation of Smith. We think it a fair deduction from the testimony of both witnesses that Moulton agreed, in terms, in July, 1873, to give an extension until after threshing, that is, until the next autumn ; and we must consider the case as though the fact had been found more specifically-. The pre- cise question is, whether an action could have been maintained on the note in suit before the time of the alleged extension had elapsed. If it could, there was no valid extension, and the surety is not discharged. If the right of action was thereby suspended, he is discharged. Had Smith paid money for the extension, it would have bound the plaintiff, and the defendant would have been released from liability on the note.* 1 Bangs v. Strong, 10 Paige, 11, Accord. See also Scholefiekl v. Templer, 4 De G. & J. 429. — Ed. 2 Only the opinion of the Court upon the effect of the agreement to forbear is given. — Ed. 3 Vary v. Norton, 6 F. R. 808 ; Myers v. First Bank, 78 111. 257 ; Lemman v. Whit- man, 75 Ind. 318; Kelly v. Gillespie, 12 Iowa, 56; Kenningham v. Bedford, 1 B. Mon. 182 MOULTON V. POSTEN. [CHAP. II. This is expressly ruled in the late case of Hamilton v. Prouty, 1 where the whole subject is very fully discussed and the authorities collected, in the opinion of Mr. Justice Cassoday. It seems to us that the doctrine of that case is applicable here, not- withstanding Smith gave his note for the premium instead of paying it in money as was there done. The money paid in that case and the note given in this case were alike in excess of the highest legal rate of interest. The money there paid could have been recovered back by the party who paid it if sued for in time. So here, if Smith has paid his note given for the consideration of the extension, or hereafter pays it, he may maintain his action to recover back the money paid if brought within the prescribed time. And in either case the statutory penalty could also be recovered. It was held in Hamilton v. Prouty, that although the transaction was usurious, it was binding upon the plaintiff, who received the money' for the extension, and he would not be allowed to assert the illegality of the transaction and maintain an action on the note before the agreed period of extension expired. No good reason is perceived why the same rule is not applicable to this case. The agreement for extension was exe- cuted by the giving of a note for the consideration of it as effectually as it would have been by paying the same in money. It is only a dif- ferent mode of execution. Had the plaintiff brought an action on the note in suit before the time of extension expired, it seems to us that the action would have abated on proof that he had agreed to extend and received Smith's note for the consideration of the extension. He could not have been heard to allege that the note taken for the extension was usurious, and that there was no consideration for his agreement to extend. The right to make that allegation was in Smith alone. We conclude that the case is within the rule of Hamilton v. Prouty, and hence that the defendant is discharged from liability on the note. By the Court. Judgment affirmed. 2 225 ; Stillwell v. Aaron, 69 Mo. 539; Wild v. Howe, 74 Mo. 551 ; Bank v. Woodward, 5 N. H. 99; Billington v. Wagoner, 33 N. Y. 31 (virtually overruling dicta in Vilas v. Jones, 1 N. Y. 274, 286, 287) ; Draper v. Trescott, 29 Barb. 401 ; Nat. Bank v. Place, 15 Hun, 564; Scott v. Harris, 76 N. Ca. 205 (but see Bank v. Lineburger, 83 N. Ca. 454) ; Osborne v. Low, 40 Ohio St. 347 ; Mann v. Brown, 71 Tex. 241 ; Turrill v. Boynton, 23 Vt. 142; Austin v. Dorwin, 30 Vt. 38; Armistead v. Ward, 2 Pat. & H. 504 ; Glenn v. Morgan, 23 W. Va. 467 ; Hamilton v. Prouty, 50 Wis. 592, Accord. In a few jurisdictions the statutes against usury are interpreted as making the usuri- ous payment of necessity a part payment of the debt ; and as a part payment of a debt is not a valid consideration for a promise by the creditor, there is no legal agreement to give time, and therefore the surety is not discharged. Jenness v. Cutler, 12 Kas. 500; Polkinghorne v. Hendricks, 61 Miss. 366; Nightingale v. Meginnis, 34 N. J. 461; Hartman v. Danner, 74 Pa. 36 ; Calvert v. Good, 95 Pa. 65 (compare Grayson's Ap. 108 Pa. 581); Cornwell v. Holly, 5 Rich. 47. The case of Howell v. Sevier, 1 Lea, 360, if not to be supported on this ground, must be deemed erroneous. — Ed. 1 50 Wis. 592. 2 Scott v. Safford, 37 Ga. 384 ; Corielie v. Allen, 13 Iowa, 289 ; Fay v. Tower, 58 Wis. 286, Accord. Kyle v. Bostick, 10 Ala. 589; Gilder v. Jeter, 11 Ala. 256; Anderson v. Mannon, SECT. II.] MOULTON V. POSTEN. 183 7 13. Mon. 217; Duncan v. Reed, 8 B. Mou. 382; Roberts v. Stewart, 31 Miss. 664 (semble); Wilson v. Langsford, 5 Humph. 320; Smith v. Woodbury, 36 Vt. 303, Contra. The cases iu the preceding paragraph proceeded upon the theory that a note for the usurious amount was to be treated like any other promise. It is generally held, where there are merely mutual promises to give time and to pay usury (no note being given), that the surety is not discharged, because neither promise is enforceable. Cox v. Mobile Co., 37 Ala. 320; Galbraith v. Fullerton, 53 111. 126; Silmeyer v. Schaffer, 60 111. 479; Braman v. Bowk, 1 Blackf. 392; Tudor v. Goodloe, 1 B. Mon. 322; Pyke v. Clerk, 3 B. Mou. 2G2 ; Scott v. Hall, 6 B. Mon. 285; Berry v. Pullen, 69 Mo. 101 ; Ives v. Bosley, 35 Md. 262 (semble); Roberts v. Stewart, 31 Mi>s. 104; Fernan v. Doubleday, 3 Lans. 216; Thayer v. King, 31 Hun, 43? ; Payne v. Powell, 14 Tex. 600 ; Burgess v. Dewey, 33 Vt. 618 ; Meiswinkle v. Jung, 30 Wis. 361. ( But see Kiley v. Gregg, 16 Wis. 666.) But see contra, Stallings v. Johnson, 27 Ga. 564; Parmelee v. Williams, 72 Ga. 42; Wheat v. Kendall, 6 N. H. 504 ; Wright v. Bartlett, 43 N. II. 548, 551 ; Draper v. Trescott, 29 Barb. 401, 407 ; Armistead v. Ward, 2 Pat. & H. 504, 514. On the same principle it has been thought that a promise to give time to the prin- cipal in consideration of a counter promise, not enforceable because of the Statute of Frauds, would not discharge a surety. Philpot v. Briant, 4 Bing. 717 ; Agee v. Steele, 8 Ala. 948; Berry v. Pullen, 69 Me. 101, 104. It is well settled, however, that the inability of one of the parties to a bilateral contract to sue the other because of the Statute of Frauds, does uot affect his own liability. — Ed. GILLESPIE V. TORRANCE. [chap, il /°** ' Defence s^ base d upon Principal Debtor'' 8 Right of Set-off or ™ mnter-cla im ag ainst the Creditor. _\ *— 3=rt X - (L yiter-claim^wcmi GILL ESPIE and Another v. TORRANCE. In the Court of Appeals, New York, September, 1862. ' * j^T" [Reported in 25 iVew Jor^ Rejyorts, 306.] ^Appeal from the Superior Court of the city of New York. Action pon a promissor}' note against the indorser only. Defence, that the indorsement was for the accommodation of the maker ; that the note was one of several given for oak timber sold to the maker by the plain- tiffs ; that the timber was a raft in the Hudson river, opposite the city of New York, and that, on making the sale, the plaintiffs produced certificates of inspection showing that there were 29,441 feet of first quality oak, for which Van Pelt, the maker of the notes, agreed to pay 27 1 cents per foot, and 5,523 feet of second quality or refuse oak, for which Van Pelt agreed to pay 13| cents per foot ; that, by the usage of the timber trade in New York, the seller is deemed to warrant that the timber sold corresponds in quantity and quality with the de- scription in such inspection certificates ; that Van Pelt gave his notes, indorsed by the defendant, for various sums, amounting in the aggre- gate to $9,000, the price of the timber as computed from the inspection certificates, and all of which notes had been paid except the one in suit ; that after the deliver}' of the timber it was discovered that the inspection certificates were erroneous in this, that of the timber of first quality there was 15,000 feet less than the certificates stated, and an equal excess in the refuse timber ; that if the prices had been correctly computed according to the fact, instead of being computed according to the certificate, it would have amounted to less than $5,000 ; that the plaintiffs had, therefore, been overpaid, and there was no consideration for the note in suit. On the trial, the judge, under exception by the defendant, excluded evidence as to the quantity of the timber of the different qualities ; declined to permit an amendment of the answer alleging an express warranty ; and excluded evidence of the usage set up in the answer, making a sale by certificate equivalent to a war- ranty. The other facts stated in the answer were substantially proved or admitted. The plaintiffs had a verdict and judgment, which having been affirmed at general term, the defendant appealed to this court. Charles A. RapaMo, for the appellant. William Stanley, for the respondents. SECT. III.] GILLESPIE V. TORRANCE. 185 Selden, J. The defence in this case is not founded on a failure of the consideration of the note, otherw ise t han by a delect in th e q uality ot the timbe r fo r which it was given. T hat being so, if there was neither warranty nor f raud in the sale o f the timber, the defect in quality constitutes no d efence. Seixas v. Woods ; 1 Sweet v. Colgate ;' 2 VvelsFT v. Carter; 3 Johnson r~ Titus. 4 The answer does not allege fraud in the transacti on, and unless it shows a warrant}- o f the qualit}- of the timber, it presents no defence to the note, either partial or total. The argument or tne appellants counsel, to maintain the position that the defence rested upon a failure of consideration, and not upon a claim for damages on a breach of warranty, is very ingenious ; but the answer and the proof show that all the timber contracted to be delivered to Van Pelt, and for which the notes were given, was in fact delivered, and the real ground of complaint is, that a much larger proportion of it than was shown by the inspector's certificates, upon the faith of which the purchase was made, proved to be of inferior quality. The law being well established that such defect of quality, in the absence of fraud or warranty, constitutes no defence to the note, or to aivy part of it, and there being no pretence of fraud, it follows that the defence, if there is an}-, rests upon a breach of warranty. The question then arises, whether the plaintiff, an accommodation indorser upon a note given by Van Pelt to the plaintiffs for the timber, can avail himself of a breach of the contract of warranty in regard to the quality of the timber, made by the plaintiffs to Van Pelt, on the sale to him. To decide this question, it is necessary to ascertain the ground upon which such defences, by wa}- of recoupment, as they were denominated prior to the adoption of the Code, now partially, if not wholby, merged in the much broader term, counter-claim, were admitted. If we regard such defences as resting upon a failure of the considera- tion of the contract on which the pl aintiff's action is fo unded, then unquestiona bby the defendant could avail himself of the breach of war- r anty in Thi s cas e, because an indorser or suret}' may always, where th e contract has not been assigned, show a fa ilure, part ial or total, of con- sid eration of h is p rincipal's contract whi ch he is called upon to perform. But if such defences are regarded as the setting off of distinct causes of; action, one against the other, then it is clear, as will be shown hereafter, | that this defendant could not avail himself of such defence. The subject of the precise ground on which a defendant is allowed to reduce a recovery against him, in an action upon a contract, Iry alleg- ing and proving fraud or breach of warranty — whether the contract, where there is fraud, is regarded as destroyed, and the recovery had on a quantum meruit, or whether the reduction of the plaintiff's' claim rests upon a partial failure of consideration, or upon the setting off of distinct claims against each other — has often been discussed, but without an}- general concurrence of opinion on the question. Reab 1 2 Caines, 48. 3 1 Wend. 185. 2 20 John. 196. 4 2 Hill, 606. 186 GILLESPIE V. TORRANCE. [chap, il n v. McAllister ; * Batterman v. Pierce ; 2 Ives v. Van Epps ; 3 Nichols v. Dusenbury ; 4 Van Epps v. Harrison ; 5 Barber v. Rose ; 6 Baston v. Butler; 7 Withers v. Greene. 8 A careful examination of the subject, I think, must lead to the con- clusion, that wherever recoupment, strictly such, is allowed, distinct causes of action are set off against each other. This would seem to follow from the right of election, which all the cases admit the defend- ant has, to set up his claim for damages by way of defence, or to resort to a cross-action to recover them. Ives v. Van Epps; 9 Batterman v. Pierce; 10 Britton v. Turner; 11 Halsey v. Carter; 12 Barber v. Rose; 13 Stever v. Lamoure. 14 In many cases the defendant's damages would exceed the amount of the plaintiff's claim, which shows conclusively that such damages do not rest upon a mere failure of consideration. Where there is fraud, j the party deceived, on discovering the fraud, ma y rescind the cont ract ; but it ne does not d6 that, tne contract on Ins part remains entire, not broken and not modi fied, and he 1 ls~ bollTrd to per form it fully according" - he has, however, arising from the fraud, a distinct cause f of action, the amount of which he may set off against any liability on hi s part growing out of the transaction in which the fraud was perpe- trated. As was said by Bronson, J., in Van Epps v. Harrison : " When sued for the price, the vendee may in general recoup damages ; but while he retains the property he cannot treat the contract as wholly void, and refuse to pay anything. By retaining the property he affirms the validity of the contract, and can be entitled to nothing more than the damages which he has sustained by reason of the fraud." The same principle is applicable to cases of warrant} 7 , except that th e breach of warranty gives no right to rescind, unless there is an expre ss c ontract to tnat effec t. Street v. Blay ; 15 Voorhees v. Earl ; 16 Cary v. ^Gruman ; 17 Muller v. Eno ; 18 Thornton v. Winn; 19 Lattin v. Davis. 20 In ordinary cases of breach of warrant}', therefore, both contracts remain binding to their full extent, and where recoupment is allowed, damages for a breach on one side are set off against like damages on the other side. The "cross-claims arising out of the same trans- action compensate one another, and the balance only is recovered." 8 Wend. 115 ; 22 id. 156 ; 3 Hill, 174; 2 Comst. 286.' It has always been optional, as is suggested above, since the doctrine 1 4 Wend. 90 et seq.; s. C. in error, 8 id. 109. 2 3 Hill, 171, 177. 3 22 Wend. 155. * 2 Comst. 286. 5 5 Hill, 66. 6 Id. 78. 7 7 East, 479. « 9 How. U. S. 213. 9 22 Wend. 157. 10 3 Hill, 171. 11 6 N. H. 481. 12 l Duer, 667. 13 5 Hill, 81. i* Lalor's Supp. 352, note a. 15 2 Barn. & Ad. 456. 1 6 2 Hill, 288. " 4 Id. 625. 1 8 14 N. Y. 597. 19 12 Wheat. 183. 2° Lalor's Supp. 16. SECT. III.] GILLESPIE V. TORRANCE. 187 of recoupment has gained a foothold in the courts, with a party who has sustained damages by fraud or breach of warranty in the purchase of goods, when sued for their price, to set off or recoup such damages in that action, or to reserve his claim for a cross-action ; and when he elected to recoup he could not, under the Revised Statutes, have a bal- ance certified in his favor, nor could he maintain a subsequent action for such balance. Sickles v. Pattison ; 1 Batterman v. Pierce ; 2 Wilder v. Case ; 3 Stever v. Lamoure ; 4 Britton v. Turner. 5 Under the Code of Procedure, doubtless a balance might be recovered : Code, §§ 150-274 ; Ogden v. Coddington ; 6 but the right of elect ion t o set up a counter-claim in defence, or to bring a cross-action for i t, still exist s : Halsey v. Carter; 7 Welch v. Hazleton. 8 Now it is not easy to reconcile with these established principles, the right of the defendant in this suit to avail himself of the claim which Van Pelt may have against the plaintiffs on a breach of warrant}'. 1. Such damages constitute a counter-claim, and not a mere failure of con- sideration, and not being due to the defendant, cannot be claimed by him. Code, § 150 ; Lemon v. Trull. 9 2. Van Pelt has a right of election whether the damages shall be claimed by way of recoupment in the suit on the note, or reserved for a cross-action. The defendant cannot make this election for him. 3. If the defendant has a right to set up the counter-claim, and have it allowed, in this action, it must bar any future action by Van Pelt for the breach of warrant}- ; and as no balance could be found in defendant's favor, he might thus bar a large claim in cancelling a small one. If the right exists in this case, it would equally exist if the note was but $100 instead of $1,800. 4. Supposing the other notes given for the timber to have been in- dorsed by different persons, for the accommodation of Van Pelt, and all to remain unpaid, each of the indorsers would have the same rights as the defendant. If they were to set up the same defence, how would the conflicting claims be reconciled? In the case which was shown on the trial, there would seem to be a strono- equity in favor of the defendant to have the note cancelled or reduced, by applying towards its satisfaction the damages which appear to be due to Van Pelt for the breach of warranty. It is, however, an equity, in which Van Pelt is interested to as great, and possibly to a greater, extent than the defendant, and cannot be disposed of without having him before the Court, so that his rights, as well as those of the defendant, may be protected. That remedy may be open to the defendant still, notwithstanding the judgment; especially if the in- solvency of the parties renders that course necessary for his protec /^, 1 14 Wend. 257. 2 .3 Hill, 171. 8 16 WeDd. 583. 4 Lalor's Supp. 352, note a. 6 fi N. H. 481. 6 2 E. D. Smith, 317. 7 6 Duer, 667. 8 14 How. Pr. 97. 9 13 How. Pr. 248 ; 16 id. 576, note. 188 BECHERVAISE V. LEWIS. [CHAP. II. tion. 1 14 Johns. 63 ; 17 id. 389 ; 2 Cow. 261 ; 2 Paige, 581 ; 6 Dana, 32 ; 8 id. 164 ; 2 Story's Eq. Jur. §§ 1446 a, 1437. My conclusion is, that the Court below was right in holding that the defendant could not set up the breach of warranty in defence, partial or total, to the suit on the note ; and as the warrant}* presented the only ground on which there could be a claim of defence under the answer, there is no necessity for considering the other questions presented in the case. The judgment should be affirmed. All the judges concurring, Judgment affirmed. 2 BECHERVAISE v. LEWIS. In the Common Pleas, May 22, 1872. [Reported in Law Reports, 7 Common Pleas, 372. J The judgment of the Court (Willes, Keating, Montague Smith, and Brett, JJ.) was delivered by Willes, J. 3 The declaration is upon a promissory note made by the defendant payable to the plaintiff. The second plea, for a defence on equitable grounds, states that the note was not made by the defendant alone, but was a joint and several note by him and one Rowe; that it was made for and on account and in payment of a sum which Rowe had agreed to pay the plaintiff and for which the defend- ant was not liable otherwise than as surety for Rowe; that the plain- tiff at the time of the making of the note knew that the defendant was a surety only; that the plaintiff, after the making of the note, became indebted to Rowe in an amount equal to the amount of the note and of all other moneys due from Rowe to the plaintiff, which 1 Alcoy Railway v. Greenhill, 41 Sol. J. 330 ; Scholze v. Steiner, 100 Ala. 148 ; Becker v. Northway, 44 Minn. 61 (set-off); Brown v. Norcook, 17 N. J. Eq. 219 (semble) ; Morgan v. Smith, 7 Hun, 244, 245 (semble) ; Jarratt v. Martin, 70 N. Ca. 459 ; Clark v. Sullivan, 2 N. Dak. 103 (semble) ; Hiner v. Newtou, 30 Wis. 640 (semble) ; McDonald Co. v. Moran, 52 Wis. 203, Accord. — Ed. 2 Counter-claim. Osborne v. Bryee, 23 F. R. 171 ; Stockton Society v. Giddings, 96 Cal. 84 (semble) ; Lasher v. Williamson, 55 N. Y. 619 ; Newton v. Lee, 139 N. Y. 332 ; Lewis ;;. McMillen, 41 Barb. 420; Morgan v. Smith, 7 Hun, 244 ; Henry v. Daley, 17 Hun, 210 ; Emery v. Baltz, 22 Hun, 434 ; La Farge v. Halsey, 1 Bosw. 171 ; Phoenix Co. v. Rhea (Tenn. 1897), 40 S. W. R. 482 (affirming 38 S. W.*R. 1079), Accord. Meyer v. Stookey, 3 111. Ap. 336 (semble) ; Scroggin v. Holland, 16 Mo 419 ; Ault- man v. Hefner, 67 Tex. 54 ; Edmunds v. Harper, 31 Grat. 637 (statutory), Contra. Set-off. A surety, sued alone, cannot reduce the plain tiff's clai m bv jea son o f a r* debt due from t he latter to the princip al. Beard v. Union Co , 71 Ala. 60 ( but se t-off allowed by statute with principal's consent, Scholze v. Steiner, 100 Ala. 1 48, 1 52 Jl Thallieimer v. Crow, 13 Colo. 397 ; Glazier v. Douglass, 32 Conn. 393 (semble) ; Graff v. Kahn, 18 111. Ap.485; Baltimore Co. v. Bitner, 15 W. Va. 455. But see contra, Booe v. Watson, 13 Ind. 387 (statutory) ; Sefton v. Hargett, 113 Ind. 592 (statutory) ; Bronaugh v. Neal, 1 Rob. La. 23. — Ed. 3 Only the opinion of the Court is given. — Ed. SECT. III. J BECIIERVAISE V. LEWIS. 189 debt remained unsatisfied; that the plaintiff became so indebted to Rowe without the consent of the defendant, and thereby without the defendant's consent prevented himself from recovering from Rowe the amount of the note. The plea then goes on to show how the plaintiff became indebted to Rowe, viz., by having received certain partnership debts which he had sold to Rowe, and for part of the pur- chase-money for which the note in question was given: it then goes on to aver that the defendant joined in making the note relying on the said sale, and on the faith and in the expectation and in con- sideration that the plaintiff would allow Rowe to receive the debts, and that there was no other consideration or value for making the note, which the plaintiff at the time of the making of the note well knew. In su bstance, the plea is a special plea by a surety, of a set-off b y t he princ ip al, aris ing out of the same transaction out of which the liability of th e su rety on tUe note arose. - A surety has a right, as against the creditor, when he has paid the debt, to have for reimbursement the benefit of all securities which the creditor holds against the principal. This alone would not help the defendant here, because he has not, nor has the principal, actually paid the creditor, and in our law set-off is not regarded as an extinc- tion of the debt between the parties. The surety, however, has another right, viz., that, as soon as his obligation to pay is become absolute, he has a right in equity to be exonerated by his principal. T hus we have a creditor who is equally liable to the prin ciqaLas the "principal _J o him, and against whom the principal has a goo d defence in la w a nd equity , and a surety who is ent itled in equity to call upon the princ ipal to exonerate him . In this state of thing's, we are b ound to conclude that the sure ty has a defence in e quity aga inst the creditor; and we are justified in doing so by th e authority of the civil law alluded to in the cour sed of the argum ent, to be found in Dig. Lib, xvi. tit. II. section 4: "Verum est, quod et Neratio placebat et Pomponius ait, ipso jure eo minus fidejussorum ex omni contractu debere, quod ex compensatione reus retinere potest. Sicut enim cum totum peto a reo, male peto, ita et fidejussor non tenetur ipso jure in majorem quantitatem, quam reus condemnari potest." There must, therefore, be judgment for the defendant upon the demurrer. Judgment for the defendants Attorneys for plaintiff: Miller & Miller. Attorney for defendant: T. H. Smith. l Murphv v. Glass, L. R. 2 P. 0. 408, Accord. See also Alcoy Railway v. Greenhill, 1897, Ch., 41 Sol. J. 330. — Ed. 190 MAHUKIN V. PEAKSON. [CHAP. II. MAHURIN v. PEARSON AND BELLOWS. Superior Court of Judicature, New Hampshire, July, 1837. [Reported in 8 New Hampshire Reports, 539.] Assumpsit on a note for $100, dated November 3, 1834, payable to the plaintiff, in sixty days, with interest. The defendant, Bellows, signed the note as surety for Pearson. The defendants pleaded the general issue, with notice of set-off of demands in favor of said Pearson. The plaintiff objected to receive said set-off, and the evi- dence offered in support thereof, on the ground of want of mutuality of the parties, the set-off being in favor of one of the defendants only; whereupon the Court rejected the set-off, and the evidence offered. 1 Parker, J. The Court erred in rejecting the set-off. It being shown that Bellows is a mere surety, we are of opinion there is sufficient mutuality in a debt due from the plaintiff to Pearson, to authorize it to be allowed in set-off, under our statute. Woods v. Carlisle; 2 Bourne v. Bennett; 3 Ex parte Hanson. 4 The cases in Vesey are cited without disapprobation by Chancellor Kent (Dale v. Cooke 5 ); although he held as a general principle " that joint and separate debts cannot be set off against each other in equity any more than at law." There are several considerations which show the propriety of allowing the set-off in this case. If the debt from the plaintiff to Pearson, which was offered in set-off, was contracted after that now in suit, it very probably might have been regarded by the parties as in effect a payment thus far. It is at least but equitable that it should so operate, whether contracted before or after. The rule in equity is, that if a creditor have security, the surety, on payment by him, is entitled to be substituted, and to have the benefit of that security. Hayes v. Ward; 6 Law v. The East India Company; 7 Evernghim v. Ensworth. 8 If, instead of having security, the cred- itor owes the principal part of the amount, and the principal is willing to put it in set-off, it is equally reasonable that the surety should have the benefit of the credit which the creditor has obtained of the principal. And, moreover, it will tend to prevent multiplicity of actions; for, should the plaintiff collect his debt of Bellows, the latter must have an action against Pearson to recover the amount, and Pearson will have a right of action on the claim now offered in set-off. 1 The arguments of counsel are omitted, together with a part of the case not relating to the validity of the plea of set-off. — Ed. 2 6 N. H. R. 27. 6 8 Pick. 122 ; 4 Johns. Ch. R. 129. 3 4 Bing. 423. 7 4 Ves. 829. 4 12 Ves. 349 ; 18 Ves. 232, s. c. 8 7 Wend. 326. 5 4 Johns Ch. R. 15. SECT. III. ] MAHURIN V. PEARSON. 191 Whether anything can be set off in this or any other case beyond the balance due from the plaintiff, on an adjustment of all the de- mands between the parties which are not comprehended in the suit, is a question not settled by this decision. New trial granted. 1 1 Set-off. Harrison v. Henderson, 4 Ga. 198; Livingston v. Marshall, 82 Ga. 281 ; Himrod v. Baugh, 85 111. 435 ; Kngs v. Matson, 11 111. Ap. 639 ; Haves v. Cooper, 14 111. Ap. 490; Weir v. Dustin, 32 111. Ap. 388 ; Bonekel v. Lofqnist, 46 111. Ap. 442 ; Reeves v. Chambers, 67 Iowa, 81 ; Spencer v. Almoney, 56 Md. 551 ; Becker v. North- way, 44 Minn. 61 ; St. Paul v. Leek, 57 Minn. 87 ; Raymond v. Green, 12 Neb. 215 (semble); Concord v. Pillsbury, 33 N. H. 310; Brewer v. Norcross, 17 N. J. Eq. 219 (semble) ; Wagner v. Stocking] 22 Ohio St. 297 ; Hollister v. Davis, 54 Pa. 508 ; People's Bank r. Legrand, 103 Pa. 309, 316 (semble) ; Guggenheim v. Rosenfeld, 9 Baxt. (Tenn.) 533 ; Brundridge v. Whitcomb, 1 D. Chip. 180; Downer v. Dana, 17 Vt. 518 ; Wartman v. Yost, 22 Grat. 595 ; Baltimore Co. v. Bitner, 15 W. Va. 455 (semble), Accord. Woodruff v. State, 7 Ark. 333 (apparently overruled by Leach v. Lambeth, 14 Ark. 668); Banks v. Pike, 15 Me. 268; Walker v. Leighton, 11 Mass. 140; Warren v. Wells, 1 Met. 80 ; Robbins v. Brooks, 42 Mich. 62 ; Paine v. Lewis, 64 Miss. 96 ; Dart v. Sherwood, 7 Wis. 523, Contra. Set-off of Judgments. A judgment in favor of a principal alone may be applied to offset a judgment against the principal and surety. Bourne v. Benett, 4 Bing. 423 ; Peirce v. Bent, 69 Me. 381 ; Skinker v. Smith, 48 Mo. Ap. 91. Counter-claim. Where a surety, made a co-defendant with the principal, is allowed to reduce the plaintiff's claim by a debt due from the latter to the principal, he is allowed the same privilege as to a counter-claim of the principal against the plaintiff. Waterman v. Clark, 76 111. 428 ; Slayback v. Jones, 9 Ind. 470 (semble) ; McHardy v. Wadsworth, 8'Mich. 349; Edmunds v. Harper, 31 Grat. 637. In New York if principal and surety are co-defendants in an action, upon a claim upon which a several judgment might be given against the principal, the latter may plead, by way of set-off or counter-claim, a demand of his against the plaintiff, and this plea will, of course, enure to the advantage of the surety. Set-off. Springer v. Dwyer, 50 N. Y. 19; Bathgate v. Haskin, 59 N. Y. 533; Newell v. Salmons, 22 Barb. 647 ; Parsons v. Nash, 8 How. Pr. 454. Counter-claim. Horton v. Dow, 10 N. Y. St. Rep. 139; Loring v. Morrison, 15 N. Y. Ap. Div. 498. In Ex parte Hanson, 12 Ves. 346, 18 Yes. 232, a principal who was sued by the assignees of a bankrupt, was permitted to set off a claim due from the bankrupt to him and his surety jointly. In Adams v. Varrell, 46 N. H. 17, a creditor sued by a principal was allowed to tet off a claim against principal and surety. — Ed. x£**-«— ^92**" (/ PEARL «TdEACON. "' Z< — ' [CHAPriT ^JtOG&T^ ^£0 jfi v^~ZZ£j ^^__^ ^^^r ACTION IV. - -_ Surrender or Loss of Securities by the Creditor. PEARL r. DEACON. In Chancery, before Sir John Romilly, M. R., June 9, 1857. {Reported in 3 Jurist, New Series, 879. 2 ) In November, 1853, Mr. Pearson, a publican, borrowed from the defendants, Messrs. Reid & Co., who were his landlords, the sum of £250. To secure the repa}ment of this sum he assigned to them a pension of £18 a }'ear, and gave them a bill of sale of his furniture, stock-in-trade, and effects. As a further security, he gave the Messrs. Reid two promissory notes of £125 each, in one of which the plaintiff joined as surety. Another person joined as suret}' in the second note. The plaintiff was informed at the time he became surety that the bill of sale of Pearson's furniture and effects had been given to Messrs. Reid. In the year 1856 Pearson was in arrears for rent (all of which had ac- crued since November, 1853), and the Messrs. Reid put a distress into Pearson's house, and seized the whole of the furniture which was com- prised in their bill of sale. They did not proceed to a sale under the distress, but by an arrangement with Pearson they caused a valuation of the furniture to be made, and agreed to take the amount of the valu- ation (£116 12s. Ad.) in part satisfaction of the arrears of rent. The plaintiff instituted the present suit, disputing the defendants' right to do this, and insisting that the value of the furniture ought to be treated as received in discharge of Pearson's previous debt, and that the plain- tiff ought to be relieved, to the extent of one moietj' of the value of the furniture, from his obligations as surety under the promissory note. Palmer, Q. C, and Bevir, for the plaintiff. Selwyn, Q. C, and W. M. HJllis, for the defendants. 2 Sir J. Romilly, M. R. At present I concur in the view taken by the plaintiff of this case. I wish, however, before I give judgment, to look into the authorities, which I had to consider at some length in the case of Farebrother v. Wodehouse. 3 June 9. Sir J. Romilly, M. R. The question which I have to decide in this case is, whether, the furniture, having been given as se- curity for the debt for which the plaintiff was liable as surety, it was in the power of the creditor, to the injury of the surety, to seize it in dis- charge of another debt. I am of the opinion that it was not. It is said that this does not come within the scope of the contract between 1 24 Beav. 186, s. c. — Ed. 2 The arguments of counsel are omitted. — Ed. 8 2 Jur. n. s. 1178. SECT. IV.] PEARL V. DEACON. 193 the surety and the creditor ; but I think it is a mistake to put the rights of the surety merely on the footing of contract. In Craythorne y. Swinburne, 1 Lord Eldon says that it is not contract, but an equity arising out of the relation between the surety and the creditor ; and in Mayhew v. Crickett, 2 the same doctrine was laid down. Capel v. Butler 3 is an express authorit}' upon this point; but it is said that in that case there is the recital of a bond, and that there is nothing analogous in the present case. But as the plaintiff had knowledge of the fact, it is immaterial whether it was conveyed in writing or otherwise. The observations of Sir W. P. Wood, V. C, in Newton v. Chorlton 4 are also in point. I am of the opinion that if the defendants require payment from the plaintiff of the note, the plaintiff is entitled to say, "You must give me the securities which 3-011 hold on the furniture for this debt." What the defendants have done has been to apply the proceeds of this furniture in discharge of a totally distinct debt, con- trary to the original arrangement, of which the suretj' was cognizant, and by which he became liable. What the defendants have received ought to be apportioned in discharge of the whole debt of £250, and the plaintiff, as surety, is liable only for a moiety of the balance. The result of holding otherwise would be this: if A advanced £1,000 on mortgage, and ten persons became sureties, each for £100, he might release or transfer the mortgage for value, and then sue each of the ten sureties for £100 each. Such a A'iew cannot possibly be sustained. I understand there is no dispute as to the A^alue of the furniture; and taking it at £116 12s. id., an account must be taken of what is due in respect of the £250, the value of the furniture to go in part discharge, and the plaintiff to be held liable for one-half of the balance, with interest. The plaintiff must have his costs up to and including the hearing. 5 3 2 Sim. & S. 457. 4 10 Hare, 646. 1 14 Ves. 160. 2 2 Swanst. 185. 5 Affirmed on appeal, 1 DeG. & J. 461. T he doc trin e of the pri ncip al case thaj^ a creditor, who surren ders a security, thereby re duces jt rojanto h is claimajtn inst T rie surety, nasiTeen repeatedly applied. Henderson y.'Huey, J f5 Ala. av^trTOBard v. Pacl^S^'Ark. 80 ; Stallings v. Hank, 59 Ga. 701 ; Rogers v. Trustees, 46 111. 428 ; Kirkpatrick v. Howk, 80 111. 122 ; Sample v. Cochran, 82 Ind. 260, 84 Ind. 594 ; Weik r. Pugh, 92 Ind. 382 ; Port v. Robbins, 35 Iowa, 208; Middleton v. First Bank, 40 Iowa, 29; Lucas Co. v. Roberts, 49 Iowa, 159 ; Heitz v. Atlee, 67 Iowa, 483 ; Bank of Monroe v. Gifford, 79 Iowa, 300; Armor v. Amis, 4 La. An. 192; Barrow v. Shields, 13 La. An. 57; Union Bank v. Cooley, 27 La. An. 202 ; Cummings v. Little, 45 Me. 183 ; Baker v. Briggs, 8 Pick. 122 ; American Bank v. Baker, 4 Met. 164 ; Guild v. Butler, 127 Mass. 386; Willis v. Davis, 3 Minn. 17 ; Taylor v. Jeter, 23 Mo. 244 ; N. H. Bank v. Colcord, 15 N. II. 119 (semble) ; Bixby v. Barklie, 26 Hun, 275 ; Underbill v. Palmer, 10 Daly, 478; Brown v. Rathburn, 10 Oreg. 1 58 ; Whartou v. Duncan, 83 Pa. 40 ; Clow v. Derby Co., 98 Pa. 432 ; Otis v. Von Storch, 15 R. I. 41 (semble) ; Cator v. Berry, 14 Lea, 408 ; Kiam r. Cummings, Tex. Civ. Ap. 1896, 36 S. W. R. 770; Adams v. Dutton, 57 Vt. 515 [semble) ; Loop v. Summers, 3 Rand. 511 ; Price Bank v. McKenzie, 91 Wis. 658; Plankinton v. Gor- man, 93 Wis. 560. But see contra, Woodward v. Clegge, 8 Ala. 317. (// The surety's liability is not affected, if he consents to the surrender of securities . — js — fc* 194 PLEDGE V. BUSS. [CHAP. It PLEDGE v. BUSS. In Chancery, before Sir W. Page Wood, V. C, January 24, 1860. [Reported in Johnson, 663.] Robert Pledge, a retail grocer, the brother of the plaintiff, was in the year 1850 indebted to the defendant Buss, a wholesale dealer, from whom Robert Pledge was in the habit of obtaiuing goods; and by the creditor. Taylor v. Bank of N. S. Wales, 11 App. Cas. 596 ; Grisard v. Hanson, 50 Ark. 2-29; Brown v. Abbott, 110 111. 162; Pence v. Gale, 20 Minn. 257. ( t-\ Nor, if the cr editor takes an equivalent security in exchange for the one given up. Thomas v. Cleveland, 33 Mo. 126 ; Lafayette Co. v. Hixon, 69 Mo. 581. But see N.Ti. Bank v. Colcord, 15 N. H. 119, and Neff's App., 9 W. & S. 36. (J) Nor, if the creditor surrenders a disputed claim as a reasonable comp romise. Be dwell v. uepliart, 67^ Iowa, 44. (t/\ Nor, if the sec urity surrendered could not be made to realize anything for the cre dit- o r's benefi t ; e. g., an execution upon exempt pr operty, a lapsed life-insurance policy, an d i he like. Hard wick v. Wright, 35 Beav. 133; Kaiubow v. Juggins, 5 Q. B. Div. 422 ; Lilly v. Roberts, 58 Ga. 363 ; Green v. Blunt, 59 Iowa, 79 ; Blydenburgh v. Bingham, 38 N. Y. 371. But t he creditor must establish the worthlessuess to him of the security relinquishe d, moss v. .rettiugill, 3 Minn. 217 ; Dunn v. Parsons, infra, T99 The Court seems to have gone too far in Coram. Bankw. Western Bank, 11 Ohio, 444. (•? J N or, if the creditor of a ba nkrupt exercises his option to surrender the security a nd prove lor t he whole amount ot the debt. Rainbow v. Juggins, 5 Q. B. Div. 422" (■C ) N or, if a judgment creditor by suing on the judgment and getting a new judgm eut waives the lien of the first judgment, and so lets in intermediate judgments iiTTav or of other person s. Perry v. Saunders, 36 Iowa, 427. (Tj i Nor if the property surrendered was subject to a prior mortgage in favor of th e surety. Stringfellow v. Williams, 6 Dana, 236 ; Glass v. Thompson, 9 B. Mon. 235. See Thomas v. Wason, 8 Colo. Ap. 452. I n Missouri the release of a part of the security does not reduce the liability of the s urety, if the pa rt re tained is a mple to secure the full payment of the debt. Saline Co. !;."~MuTeV65'Mo. 63. ' Misconduct o f Creditor in d eali^ wit*? Ppopfptv held as Security. If the creditor misappropriates o~ sells at a sacrifice, or other wise prejudices the sure ty by his misco nduct in dealing with the property which he received as s ecurity, tjie surety's liabil ity is reduced by t he amou nt *oT[ the dam age cause d by such mis- conduct. Allen v. Donald, 23 h\ K. 573 ; Robeson v. Koberts, 20 lnd. l"55 ; NevTEng- land Co. v. Randall, 42 La. An. 260 ; McMullen v. Hinkle, 39 Miss. 142 ; Holliday v. Brown, 33 Neb. 657 ; City Bank v. Young, 43 N. H. 457 ; Hutchinson v. Woodwell, 107 Pa. 509. In several of the cases just cited the principal debtor was in collusion with the creditor. If the creditor, in violation of his duty to the principal debtor, misappropri- ates or wastes the security, his claim against the principal debtor is reduced in pro- portion to the extent of the misappropriation or misuse. And this defenc e of the principal debtor enures to the advantag e of the surety. In other words, the surety's re- l ief is the sam e as in the cases cited in the_nreceding p aragraph, but fui an inde pend- ent reas on. This reason applied in the "following cases : Phares v.' Harbour, 4y~Ill. 370; Nichols r. Burch, 128 lnd. 324 ; Clopton v. Spratt, 52 Miss. 251 ; Vose r. Florida Co., 50 N. Y. 369 ; Everly v. Rice, 20 Pa. 297 ; Sitgreaves v. Farmers' Bank, 49 Pa 359. — Ed. SECT. IV.] PLEDGE V. BUSS. 1 95 on the 18th of June, 1850, R. Pledge executed a mortgage to Buss to secure the then existing debt and future advances. In October, 1850, the debt had increased, and the plaintiff, as surety, joined his brother in a promissory note to Buss for £200. In 1854, R. Pledge became bankrupt, being then considerably indebted to Buss; and by a deed dated the 1st of August, 1857, between the assignees of R. Pledge and the defendant, the equity of redemption in the mortgaged premises was conveyed to the defendant, and in consideration thereof the defendant released the assignees and the estate of R. Pledge from all claim. The plaintiff , was not consulted in this transaction, or informed of it at the time. A dividend of 6d. in the pound had been previously declared on R. Pledge's estate, but no proof had been made in respect of the debt to Buss. In April, 1858, the defendant commenced an action on the note against the plaintiff, and this bill was filed praying a declaration that the plaintiff's liability as surety was avoided by the misrepresenta- tion, 1 ^)!', if not, then that the plaintiff was discharged in equity by the execution of the deed of 1857. Mr. Bolt, Q. C, and Mr. E. F. Smith, for the plaintiff, cited Bonser v . Cox; 2 Lord Harberton v. Bennett. 3 Mr. James, Q. C, and Mr. Bevir, for the defendant: — With respect to the deed of 1857, this was not such a dealing as would discharge a surety. A surety is discharged if time is given or the nature of the debt is varied. A surety also has a right, on paying the debt, to the benefit of all securities held by the creditor; but this equity is quite distinct from that which arises out of a varia- tion of the debt. This deed does not release the debtor or alter the nature of the debt; it merely releases all claim to prove against the estate, and cannot discharge the surety even if it gives him some right to compensation. Harberton v. Bennett, as reported, is founded on no intelligible principle. The surety might have paid the debt and proved himself; and at the most the only damage which he can have suffered is the loss of the sixpenny dividend, the amount of which we are willing to allow him; and we admit his right on paying the debt to have a charge upon the mortgaged premises. [They cited Browne v. Carr.*] Vice-Chancellor Sir W. Page Wood: — The other point of the case was very ingeniously argued; but the law is now well established, that a person having a mortgage for a guaranteed debt is bound to hold it for the benefit of the surety, so as to enable him, on paying the debt which he has guaranteed, to take the security in its original condition unimpaired. In this case the principal debtor having become bankrupt, the creditor, instead of going in under the bankruptcy as he might have done, and appty- 1 So much of the case as relates to this point is omitted. — Ed. 2 4 Beav. 379. 3 Beatt. 386. * 2 Kuss. 600; s. c. 7 Bing. 508. 196 PLEDGE V. BUSS. [CHAP. IL ing to have the security realized and to be admitted to prove for the balance, in effect purchased the equity of redemption (no doubt on ad- vantageous terms), the price being the surrender of his right of proof. The consequences of this were twofold : In the first place the surety could not get the security with the same title under which the creditor held it, which dated from 1850. This might be a matter of no small importance, having regard to the possibility of intervening judg- ments or other charges. All that the creditor can now give to the surety is a security taking priority from the present time. The right of the surety was to have the same security in exactly the same plight and condition in which it stood in the creditor's hands. This he cannot now get. Again, the surety has been deprived of the benefit of proof against the bankrupt's estate. Mr. James relied on authorities which decided that a creditor did not release a surety by signing the debtor's cer- tificate, and argued that the surety might have paid the debt and gone in and proved himself. The decisions as to the effect of signing a bankrupt's certificate do not apply, because a debtor in giving his signature in a proper case is merely performing a duty ; and if the surety does not obtain a voice in the matter himself, it is his own fault. But here no proof was made by the creditor against the principal debtor; and the estate was as a matter of bargain released from proof ; and this was done without giving any notice to the surety of what, was contemplated. But, apart from this, the alteration which has been made in the nature of the security is a sufficient ground for my decision. The case before Lord Manners is quite reconcilable with the gen- eral principle. The plaintiff there came into equity upon a mortgage granted by a surety. The answer was not that the mortgage was bad, as Mr. James put it, but that it was a security for the perform- ance of certain covenants, and that those covenants had been released; and consequently, that, if the surety paid the claim, and sought to use the name of the creditor in enforcing those covenants, he would be met by the answer that the covenants were gone. It was on that ground that the bill was dismissed. I refer to the case of Newton v. Chorlton, 1 before myself, for the purpose of saying, that, although it has not been overruled, the Lords Justices have in another case intimated that they do not concur with the view which I then took. I am as much bound to submit to their opinion, as if the decision had been reversed on appeal before them. That was a case where a creditor after the contract of suretyship had obtained a security for the debt, which he afterwards parted with, and I considered that, in the absence of any authority, I could not hold that the same principle applied to after-taken securities which prevails with respect to those which exist at the date of the contract 1 10 Hare. 646. SECT. IV.] WRIGHT V. KNEPPER. 197 of suretyship, the full and unimpaired benefit of which the surety is entitled to have preserved for him. But the Lords Justices have since held that the rights of a surety extend to this, that he is entitled to have every after-taken security kept intact for his benefit. 1 The present is a much stronger case, because the security was taken at the time when the debt was contracted ; but even if it had been otherwise, I should not think myself at liberty to follow Newton v. Chorlton, after the intimation of the opinion of the Lords Justices. For the present purpose, it is enough to say that I cannot enter into the question whether the security which the surety might now get, would or would not be as beneficial as the original security. He can- not have the same title or the same estate which formed the security in 1850, and the effect of this alteration in the security is, that the surety is discharged.' 2 WRIGHT, for Use of ENSLEY, v. KNEPPER and Others. In the Supreme Court, Pennsylvania, September Term, 1845. [Reported in 1 Barr, 361.] Error to the Court of Common Pleas of Alleghany county. In the Court below this was a scire facias to revive judgment, &c, in which Pmoch Wright, for the use of Michael Ensley, the plaintiff in error, was the plaintiff, and William W. Knepper, Leopold Sahl, and William Leckey, were the defendants. The facts of the case are these : — Enoch Wright obtained an amicable judgment by confession, against the defendants for $618.84, which, on the 7th of July, 1841, was entered of record in Alleghany county, and became a lien on a lot of ground situate in Alleghany city, and owned by Leopold Sahl. On the 16th of December, 1842, Leopold Sahl, for the consideration of $460, conveyed this lot to Michael Ensley. On the 17th of June, 1844, Enoch Wright, for a bona fide consid- eration, assigned the judgment to Michael Ensley, without recourse, and subject to a credit of $200, paid 26th July, 1841, and a further credit of interest on the whole amount to April 1, 1841. It was proved on the part of Wm. Leckey (who alone made defence to the scire facias), that he was only a surety, and Leopold Sahl the principal. 1 Campbell v. Rothwell, 47 L. J. C. L. 144; Holland v. Johnson, 51 Ind. 340; Freaner v. Yingling, 37 Md. 491 ; Willis v. Davis, 3 Minn. 17, Accord. — Ed. 2 In Hereford v. Buss, 1 Bob. (La.) 212, one who had a vendor's lien upon ten slaves, repurchased nine of them from the vendee. This repurchase, it was decided, discharged the surety on the note of the original buyer for the purchase price. The effect upon the rights of a surety of a purchase by a second creditor of the principal debtor's interest in the property pledged, was considered in Cullum v. Emanuel, 1 Ala. 23, 29 ; McMullen v. Hinkle, 39 Miss. 142 ; Wheelwright v. Depeys- ter, 4 Edw. Ch. 232. — Ed. 198 WRIGHT V. KNEPPER. [CHAP. rf. The counsel of Wm. Lecke}- asked the Court to instruct the jury : — That if they believed Win. Leckey to have been the surety of Leo- pold Sahl in this case, that Michael Ensley being the owner of the judgment, and the owner of the lot which was bound by it ; the judg- ment is extinguished (so far as Lecke}- is concerned) to the extent of the value of the lot at the time that Ensley became the owner of the judgment, and Win. Lecke}' is entitled to be credited to that extent. That if the plaintiff in a judgment becomes the owner of the land on which the judgment is a lien, the lien thereby becomes extinct by operation of law. That the assignee of the judgment in this case having received a transfer of the same, after he had purchased the property upon which the same was a lien, the judgment must be con- sidered as satisfied to the extent of the value of the property. The President charged the jury in accordance with the defendant's points; and further, if Wm. Lecke} 7 was a suret}', the matters urged by defendants constitute a good defence to the extent of the value of the lot. To this charge the counsel of the plaintiff excepted. The jury found a verdict for the defendant. The plaintiff thereupon took this writ of error, and assigned for error in this Court the directions of the Court below upon the points submitted by the counsel of the defendant. Woods, for plaintiff in error. Washington, contra, cited 7 Watts, 20 ; 5 Rawle, 57 ; 1 Watts & Serg. 156. The opinion of the Court was delivered by Rogers, J. The judgment on which suit was brought was a lien on a lot now owned by Michael Ensley. Ensle}- became the purchaser of the judg- ment subsequently, and now seeks to enforce payment by means of a scire facias against William Lecke^y, the suret}'. This raises the ques- tion, whether the purchaser of a lot bound by a judgment against three persons, in which one of the debtors is a suret} - , by purchasing and taking an assignment of the judgment, discharges the surety pro tanto. We shall best arrive at a correct conclusion, by considering the situa- tion of the surety before the assignment. If the creditor levies his debt by sale of the premises on which the judgment is a lien, the suret}* is discharged from the debt. And this, so far as the surety is concerned, would be the duty of the creditor, a duty which would be j, ^, v enforced by a Court of Equity, who would compel him in the first place to go against the land. But although we have no such power in this State, yet we have adopted to the fullest extent the principle, that equity considers that as done which ought to be done. Again, if the creditor levies the debt from the surety, the latter has a right to be substituted to all the securities of the principal, and by this means to an indemnit}' against the sale of the real propert}' bound by the judg- ment. Nor has the purchaser any just right to complain, as he had constructive, if not actual notice of the lien, and of course purchased SECT. IV.] DUNN V. PARSONS. 199 subject to it. He takes the property incumbered with the same equi- ties as the original owner, and as regards him it is settled ; the surety upon payment of the debt is entitled to substitution against the principal. In Thorn v. Ilartman, 1 the general principle is ruled, that if the plaintiffs in the judgment become the owners of the land upon which the judgment is a lien, the lien becomes extinct by operation of law. Of the benefit of this principle to the extent of the value of the land, the suret}- cannot be deprived. But by purchasing the judgment and obtaining control of it, the plaintiff seeks to levy the debt from the surety, and thereby exempt the lot, of which he has reluctantly become the owner, from the lien of the judgment. The writ was issued against all the defendants, but issue is joined, and the trial had with the surety alone ; and as the jury have found the value of the lot to be equal to the amount of the judgment, we are of opinion the assignee is not entitled to have his judgment revived. A Court of Chancery would restrain him from proceeding on his judgment, and of course, according to our practice, it is equitable defence to a scire facias. Judgment affirmed. 2 TT J& '' A. DUNN, Appellant, v. C. PARSONSL RESPbNDEjsT. -^ — »>n In the' Supreme Court. Newtork, March Term, 1886. * -*^- Smith, P. J. The plainti ff was sued as indorser of a promissory note made by J. Getz & Co. The defence litigated was, that ther^*«-J*r "^ creditor had voluntarily released certain real estate belonging to the ^pU^^"^ makers from the lien of a judgment which he had obtained against them on said note before suing the indorser. The real estate con- X^£- sisted of three parcels, one of six and T 8 „% acres of land in the city of Buffalo, and two in the town of Tonawanda, containing eighty- VC"*-*- 6 ^* three and -f^ 5 acres and 141 and ^fe acres of land, respectively. The"^-^^ /^, claim in suit was for $5,000, and interest from June, 1872. At the t rial evidence was given on the part of the plaintiff tending to sho w that the premis es released were incumbered by prior liens to the extent of The full value of the p remises. T he defendant gave evi- dence tending to show th at the pre mises released we re of su fficient v alue to pay the j udgment and the pr ior incumbrance in ful l. The defendant's counsel moved the Court to direct a verdict for the defendant. The plaintiff's counsel objected, and asked the Court to submit to the jury the question whether said releases, or either of them, had in any manner injured the defendant or impaired his security; and if so, to what extent. The judge declined to submit said question to the jury, and directed the jury to render a verdict /^) 3-b* 1 7 Watts, 20. 2 Johnson v. Young, 20 W. Va. 614, Accord. — Ed. 200 DUNN V. PARSONS. [CHAP. IL for the defendant, to which refusal and direction the plaintiff's coun- sel duly excepted. Upon those exceptions arises the only question in the case. The defendant was an accommodation indorser, and consequently was a mere surety for the makers of the note. And the holder of the note having obtained a judgment upon it, which became a lien upon the real estate of the makers, or one of them, the defendant, as surety, was entitled to regard the judgment and its lien as security for the principal debt, and to be subrogated in the place of the cred- itor in respect to the judgment and its lien, in case he paid the debt. The creditor having voluntarily released the lien of the judgment upon the real property of the principal debtor, it is now contended on the part of the defendant, as it was at the trial, that he is abso- lutely discharged from liability, without reference to the question whether he was actually damnified by the release, or, if damnified, to what extent. And it is claimed that there is a distinction in this respect between cases where the release is the voluntary act of the creditor and those in which it is the result of mere laches on his part. The case of Vose v. The Florida Railroad Company 1 is an author- ity adverse to that contention. It was held in that case that a sale by a creditor of collateral securities, placed in his hands by the principal debtor, in violation of a stipulation for a particular notice of sale contained in the contract under which they were pledged, does not, per se, discharge a surety, in toto, who is liable for the debt, but by such sale the creditor makes the securities his own to the extent of discharging the surety to an amount equal to their value. AndreAv.s, J., speaking for all the members of the 'Court who voted in the case, said: "The act of the creditor did not change the contract upon which Yulee was surety, and the rights of all parties will be fully protected if it shall be held that the debt was discharged to the extent of the value of the bonds sold in contraven- tion of the contract. It is not difficult to measure the loss actually sustained by the conversion or misapplication by the creditor of the securities in his hands. It woul d be contrary t o equity to dischar ge t he surety in toto, in consequence of a release by the credito r of a security w itU out^reference to tts ralue. " — And he cited the follow- ing authorities confirming this view: Story's Equity Jurisprudence, §326; Capel v. Butler; Law v. East India Company; 2 Payne v. Commercial Bank of Natchez; 3 Neff's Appeal. 4 The learned counsel for the respondent places his contention upon another ground, also, that even where a surety would ordinarily be discharged pro tanto only, yet, if the act of the creditor has ren- dered it impossible to estimate correctly what would be the value of the security affected, through the time it could be kept alive, the surety becomes absolutely discharged. He cites the case of Fielding 1 50 N. Y. 369. 3 6 Sm. & Marsh. 24. 2 4 Ves. 833. * 9 W. & S. 36. SECT. IV.] DUNN V. PARSONS. 201 v. Waterhouse. 1 That was not the case of a discharge of a particular piece of property from the lien of a judgment, but the judgment itself was discharged, and the decision proceeded on the idea that it was impossible to say what would have been its value if it had been kept alive. Here, however, the value of the real estate discharged was capable of being ascertained. We think, therefore, the direction to render a verdict for the defendant cannot be sustained, and that there must be a new trial. For the purposes of the new trial we hold tha t it is incum bent on the plaintiff to sh ow clea rly that the prop erty re- yl J £^^- leased co uld not have been made available at all, or not beyond a fl^ ty "^ I certain amount, to the payment o f the judgment on the note by reason oj the prior T ncuni Pran ces, and to the extent of the value of the part released, the s uret}' is discharged. 2 Holt v. Bodey. 8 Judgment reversed, and new trial ordered, costs to abide event. Barker and Bradley, JJ., concurred; Haigiit, J., not sitting. Judgment reversed, and new trial ordered, costs to abide event. 4 i 40 N. Y. Supr. Ct. 424. 2 Neff's Ap., 9 W. & S. 36, 43-44 ; Holt v. Bodey, 18 Pa. 207, Accord. — Ed. 3 18 Pa. St. 207. 4 I f a creditor, having obtained, by legal process, a lien upon the property of the ^/p rt principal debt or, relinquishes it, his claim against the surety is thereby reduced to the ^^_I / nvTmTrot tho 1 1 o n rriron nn f e xtent ol tne lie n given up. Judgment Lien. TTones v. Hawkins, 60 Pa. 52 ; First Bank v. Parsons, 42 W. Va. 137 ; Mellish v.TJreen, 5 Grant Ch. 655. Execution Lien. Mayhew v. Crickett, 2 Sw. 185 ; Wils. Ch. 418, s. c. ; State Bank v. Edwards, 275 Ala. 512 ; Winston v. Yeargin, 50 Ala. 340; Morley v. Dickinson, 12 Cal. 561; Mulford v. Estudillo, 23 Cal. 94; Thomas v. Wason, 8 Colo. Ap. 452; Houston v. Hurley, 2 Del. Ch. 247 ; Curan v. Colbert, 3 Ga. 239 ; Brown v. Biggins, 3 Ga. 405 ; Lumsden v. Leonard, 55 Ga. 374 ; Fleming v. Odurn, 59 Ga. 362 ; Bawson v. Gregory, 59 Ga. 733 ; Briuton v. Gerry, 7 111. Ap. 238 ; Sterne v. Vincennes Bank, 79 Ind. 549 ; Sherraden v. Parker, 24 Iowa, 28 ; Green v. Blunt, 59 Iowa, 79 ; Alex- ander v. Bank, 7 J. J. Marsh. 580; Comstock v. Creon, 1 Rob. La. 528; Springer v. Toothaker, 43 Me. 381 ; Chipman v. Todd, 60 Me. 282, 284 ; Moss v. Pettingill, 3 Minn. 217; Davis v. Mikell, Freem. Ch. (Miss.) 548; Brown v. Kidd, 34 Miss. 291 ; Ferguson v. Turner, 7 Mo. 497 ; Mo. Bank v. Watson, 24 Mo. 333 ; Priest v. Watson, 75 Mo. 110; Bronson v. McCormick Co. (Neb. 1897), 72 N. W. R. 312; Cooper v. Wilcox, 2 Dev. & B. Eq. 90; Nelson v. Williams, 2 Dev. & B. Eq. 118; Smithy. McLeod, 3 Ired. Eq. 390; Dixon v. Ewing, 3 Ohio, 280; Day v. Ramey, 40 Oh. St. 446; Commw. v. Miller, 8 S. & R. 452 ; Commw. v. Haas, 16 S. & R. 252; Bank v. Fordyce, 9 Pa. 275 ; Holt v. Bodey, 18 Pa. 207 ; Templeton v. Shapley, 107 Pa. 370; Finley v. King, 1 Head, 123 ; Watson v. Read, 1 Tenn. Ch. 196 ; Parker v. Nations, 33 Tex. 210; Jenkins v. McNeese, 34 Tex. 189; Baird v. Rice, 1 Call, 18; Shannon v. McMullin, 25 Grat. 211 (semble); Johnson v. Young, 20 W. Va. 614; McKenzie t\ Wiley, 27 W. Va. 658 ; Hyde v. Rogers, 59 Wis. 154 ; Spencer v. Thompson, 6 Ir. C. L. R, 537. Attachment Lie n. Maquoketa v. Willey, 35 Iowa, 323; Mo. Bank v. Matson. 24 Mor333; Spring v. George, 50 Hun, 227 ; Twiggs v. Augusta Bank, 26 S. Ca. 612 ; Ashby v. Smith, 9 Leigh, 164. But see contra. Glazier v. Douglass, 32 Conn. 393, 400 (semble) ; Concord Bank v. Rogers, 16 N. H. 9 ; Baker v. Davis, 22 N. H. 37; Barney v. Clark, 46 N. H. 514; f Morrison v. Citizens' Bank, 65 N. H. 253; Montpelier Bank v. Dixon, 4 Vt. 587; ^ Baker v. Marshall, 16 Vt. 522. Suspension of Seizure of Goods after Execution issued. In most jurisdictions a judg- ^>w* iO 202 FULLER V. TOMLIN^fN. [CHAP. H ^*£- A^lZZljULLER a*d An other v. TOMLINSON BROTHERS. -^L«^tiL iNiiiE&uPREMECt) ukt7k)wa7 J u^e TERM , 1882. [Reported in 58 Iowa Reports, 111.] This action was brought against the defendants as guarantors of certain promissory notes. The defendants for answer averred that the notes were given for the purchase price of property belonging to the plaintiffs ; that they contained conditions and stipulations, in substance, that the propert}' sold, and for which the notes were given, should remain the property of the plaintiffs until the notes were fully paid ; that the plain- tiffs should have the power at anj T time even before maturity of the notes to sell the property at private sale, giving the makers credit for the net proceeds realized ; that at the time the notes were turned over by the defendants to the plaintiffs, and guaranteed by the defendants, the makers of the notes still held possession of the property for which the notes were given ; that it was of great value and formed good security for the notes ; that the plaintiffs neglected and refused to take possession of the property, and sell the same, and apply the proceeds in payment of the notes ; that the plaintiffs had the exclusive right to control the security ; that the makers of the notes have become insol- vent, and the notes have become uncollectible through the negligence of the plaintiffs in not availing themselves of the securities. To the answer the plaintiffs demurred, and the Court sustained the demurrer. The defendants appeal. 1 D. W. Poindexter, for appellants. Cleland & Eaton, for appellees. Adams, J. The defendants claim that the plaintiffs had what was equivalent to a lien upon the machines for which the notes were given. This the plaintiffs deny. But for the purposes of the opinion this ma}' be conceded. The first question pr esented then is, whether the fa ilure ment credi tor does not acqu ire a lien upon the ch attels of his d ebto r until thev a re seized under t he writ of executi on. Accordingly a judgmen t creditor does not lose any right against the sur ety, if the officer, by his direction, tails to seize the goods of t he principal debtor, or returns the exec ution without any levy. Such voluntary m aul- g ence, without a binding agreement to Hold back or ab andon the exe cuti on, is no m ore prejudicial to the creditor than v olunt ary forbearance t o be gin an action again st the debtor. Summerhill v. Tapp, 52 Ala. 227 ; Crawford v. Gaulden, 33 Ga. 173 ; Jerauld v. Tippet, 62 Ind. 122; Union Bank v. Govan, 18 Miss. 333 ; Smith v. Erwin, 77 N. Yl 466 ; Thornton v. Thornton, 63 N. Ca. 211 ; Farmers' Bank v. Raynolds, 13 Ohio, 85 ; Morrison v. Hartman, 14 Pa. 55 ; McNeilly v. Cooksey, 2 Lea, 39; Humphrey v. Hitt, 6 Grat. 509 ; Knight v. Charter, 22 W. Va. 422. In a few jurisdictions the execution is a lien as soon as the writ is delivered to the office r", and 1 11 these States tne return of the execution without levy, being a disc harge j fr'the lien, has the same effect upon the creditor's right against the surety as the su r- ender of any other securit y. Sterne v. Vincennes Bank, 79 Ind. 549 ; Sterne v. McKinney, 79 Ind. 578 ; Dills v. Cecil, 4 Bush, 579 ; Ferguson v. Turner, 7 Mo. 497. — Ed. 1 The statement of the case has been slightly abridged. — Ed. ^Vrenc SECT. IV.] FULLER V. TOMLINSON. 203 of the plaintiffs to take possession of the machines, and subject them to the pay ment of their debt, until it was too late to do so, constitutes aft y defence. In support of the defendants' proposition, that it does, our attention is called to the u familiar doctrine, that the surrender of any security by a creditor, held at the time a third person becomes surety for, or guarantor of, the debt will effect a pro tanto discharge of the surety or guarantor." 2 Daniel on Negotiable Instruments, sec. 1789 ; 1 Par- sons on Bills and Notes, 242. Where such a surety or guarantor pays a debt, he is entitled to be subrogated to all the securities which the creditor had in his hands. A surrender of securities, therefore, is a direct impairment of the surety's or guarantor's rights. But the case before us is n ot one of the surr ender of secu rities. The pla intiffs are charged si mpl y with neglig ence, and in our opini on t he dcfendants*~po si- tion is not ten able. It may be conceded that if the plaintiffs had taken the machines into their possession, and while charged with responsi- bility for their proper custody and disposition, they had negligently allowed the machines to become impaired or destroyed, such negligence would have had the effect to discharge the defendants pro tanto. Day v. Elmore. 1 But such case is not before us. We have a case where the holder of paper, who has a lien upon personal property for security, but is charged with no responsibility for its custody or care, fails to enforce his lien and the security is lost. We have seen no case which goes to the extent of holding that such failure can be set up in defence by a surety or guarantor, nor do we think that such is the law. If the surety or guarantor apprehends that the securi ty will be lost , it is his privilege to pay the debt and ent orce the lien hims elf! In our opinion the demurrer to the defendant's answer was properly sustained. Affirmed: 2 1 4 Wis. 214. ^ ' 2 The surety is not, in general, relieved by the creditor's loss of collateral secur ity /feints' — 1 b y his mere in activity ; e. g(i,\ by failure to loreclose a mortgage or to take possessi on- (/ — ",-f Grisward v. Hinson, 50 Ark. 229; Freaner v. Yingling, 37 Md. 491 ; Clopton v Spratb (l 52 Miss. 251 ; Sheldon v. Williams, 11 Neb. 272; Schroeppell v. Shaw, 3 N. Y. 446; Howe Co. v. Farrington, 82 N. Y. 121 ; Day v. Elmore, 4 Wis. 190. ( it By suffering a judgment lien to expir e. U. S. v. Simpson, 3 Pen. & W. 439 ; Mun- dorffV Singer" 5 Watts, 172 ; Kindt's App., 102 Pa. 441. ( 7 j By making no effort to prot ect a second mortgage from being cut off by a fore- c losure ot the first mor tgage. Vance v. English. 78 Ind. 80 ; Wasson ;;. Hodshire, 108 Ind. 26. " (*/) By a failure to sell a depreciating secu rity. Brick ?>. Freehold Co., 37 N. J. 307; Cherry v. Miller, 7 Lea, 305. But see Harrison Works v. Templeton, 82 Tex 443. — Ed. *&t? 204 CAPEL V. BUTLER. [CHAP. U CAPEL v. BUTLER. In Chancery, before Sir John Leach, M. R. , December 17, 1825. [Reported in 2 Simons §• Stuart, 457.] One White and the plaintiff, by their bond in writing became jointly and severally bound to Butler in the penalty of £3,000 for securing the due payment of an annuity. White covenanted with Butler to pay him the annuity during the lives of himself and three other persons ; and he demised to Pruen certain hereditaments for the remainder of a term of 1,000 years; and he also assigned to Pruen two trows or vessels called "The William of Gloucester" and "The Endeavour," and likewise a policy of assurance upon the life of White, upon trust, upon default in payment of the annuity, to sell all or any of the trust premises, to pay out of the proceeds the arrears of the annuity, to invest the surplus in his name, and, out of the j'earby proceeds thereof, to keep down the annuity, and subject thereto to stand possessed of the capital in trust for White. The annuity was to cease if at any time White should pay Butler all arrears thereof and also £1,500 as the consideration for its repurchase. On the 9th of April, 1821, a commission of bankrupt issued against White, under which he was found a bankrupt; and the plaintiff and one Payne were chosen his assignees. The annuit}' being in arrear, Butler brought an action against the plaintiff on the bond. The bill, after stating these facts, alleged that the plaintiff had dis- covered, since White's bankruptcy, that Butler and Pruen had neg- lected to perfect the assignment of the trows or vessels according to the forms and in the mode required by the several acts of Parlia- ment for the registry of ships or vessels, and the transfer of prop- erty therein ; and that White had disposed of the trows or vessels and applied the proceeds to his own use, whereby the security for the regular payment of the annuity had been very much diminished; that the rents of the leasehold premises were not sufficient to an- swer the growing payments of the annuity, whereas the earnings of the vessels, together with the rents, were, when the plaintiff entered into the bond, and would still be, if the vessels had not been sold, sufficient for that purpose. The bill pra}*ed for an injunction to restrain the action; that the bond might be declared void in respect of the defendants not having rendered the assignment of the trows an effective assignment ; and that the plaintiff might be decreed to be entitled to repurchase the annuity on payment of the £1,500, and £35 (being one quarter of a year of the said annuity) less the value of the trows or vessels. 1 1 The statement of the case is abridged and the argument of the plaintiff is omitted. — Ed. SECT. IV.] CAPEL V. BUTLER. 205 Butler and Pruen admitted, in their answer, that the} - did not cause any indorsement or memorandum of the assignment of the trows or vessels to be entered on the register of the trows or vessels, by reason of the counsel, who prepared the securities for the annuity, having advised them that no such memorandum or indorsement was necessary, and that the trows were not within the Registry Act, because, amongst other reasons, they were not employed, as he considered, for any purpose beyond inland navigation on a river, the trows only trading between Bristol and Gloucester, on the rivers Severn and Avon ; and they submitted that the plaintiff: had notice of the nature of the assign- ment or conveyance which White had executed to them of the trows or vessels, and that the same were only secured or assigned to them by the indenture of July, 1820, and not by a bargain and sale and indorsement on the registry of the trows or vessels, inasmuch as the bond executed by the plaintiff referred to, and in part recited, the indenture of assignment of July, 1820. Mr. .Fonblanque and Mr. Horn Illy, for the plaintiffs. Mr. /Sitffden and Mr. Lynch, for the defendants, Butler and Pruen. Securities have failed before, but such an equit}' as the present one has never been claimed till now. There is no such rule as that the grantee of an annuity is bound to see that all the securities for it are valid. The circumstance of there being a suretj- relieves the grantee from the necessity of ascertaining whether the securities are good or not. The contract is between the grantee and the parties who are to give him the securities. The latter are all grantors ; the former, the grantee. Suppose the title to the leaseholds were bad, and the equity contended for by the plaintiff were to prevail, the very instant that the necessity for a surety arose, he would say he was discharged. If he had intended to rely on the securities, he was bound to see that they were valid. A surety is entitled to stand in the place of the creditor ; but here he asks to be placed in a better situation. How can it be said that the defendants did not use due diligence, when it appears that they took the opinion of counsel, who advised them that the assignment was valid? It has often been decided that, where a solicitor acts under the advice of counsel, he is discharged from all responsibility. This has often been held when actions have been brought against solicitors for the defects in the memorials of annuities. Under these circum- stances it is impossible to say the loss is to fall upon the defendants. The Vice-Chancellor was of opinion that the plaintiff, as surety, was entitled to take advantage of the proviso for redemption ; and that, the value of the two vessels being lost to him, by the neglect of the defendant Butler, he was entitled to deduct that value from the stipu lated price of redemption. 1 i Watson v. Alcock, 1 Sm. & G. 319, 4 D., M. & G. 242 ; Strange v. Fooks, 4 Giff. 408 (failure to notify trustee of the principal's assignment of the trust) ; Wulff v. Jay, L. R. 7 Q. B. 756 ; Sullivan v. State, 59 Ark. 47 ; Toomer v. Dickerson, 37 Ga. 428; Nance v. Winship Co. (Georgia, 1895), 21 S. E. R. 901 ; State Bank v. Bartle, 114 Mo. 276; Burr v. Boyer, 2 Neb. 265; Schroeppell v. Shaw, 3 N. Y. 446, 206 COATES V. COATES. [CHAP, il COATES v. COATES. In Chancery, before Sir John Romilly, M. R., January 14, 1864. [Reported in 33 Beavan, 249.] In 1836, the testator, Benjamin Coates, lent John Green £1,000 on the joint promissory note of John Green and William Green, pay- able six months after date, but William Green joined in the note as surety only. The testator afterwards, in 1838, lent John Green a further sum of £1,000 on his several promissory notes. In 1839, John Green deposited with the testator a policy of assur- ance for £2,000 upon his own life as a further security for both debts. The testator died in 1843. In 1845 John Green became bankrupt, and in 184G the testator's two executrixes surrendered the polkry to the Rock Office in consideration of £97 10*. William Green stated "that he was no party to the surrender of such policy, and did not consent thereto, and was not consulted upon the subject previous to such sur- render." The executrixes proved against the estate of John Green in the bankruptcy for £1,500, the balance due on the two notes, and they afterwards received a dividend of £97 upon their proof. 1 The Master op the Rolls. I think that the surrender of the policy cannot be treated as a discharge of the surety. John Green was a bankrupt, and it was not probable that he would keep up the policy, from which he could derive no benefit, and the executrixes were not bound to do so. To keep it up would have been a mere speculation on their part, which might or might not have turned out beneficial, and if it had turned out unfavorable, might have been complained of by the suret}\ They realized what they could by surrendering it to the office, and whether the policy was surrendered before or after the proof in bankruptcy, I think it did not release the surety. It was the duty of the creditor to sell and to realize the security ; by so doing, he alone could make the estate of the principal debtor available for the payment of a dividend on the debt for which the surety was liable, and consequently the benefit of which dividend is obtained by the surety in further discharge of his debt. 457 (semble) ; Teaff v. Ross, 1 Ohio St. 469 (compare Coombs v. Parke, 17 Ohio, 289); Allentown Bank v. Troxler, 174 Pa. 497 (semble), Accord. Philbrooks v. McEwen, 29 Ind. 347 ; New York Bank v. Jones, 9 Daly, 248, 250- 251 (semble) ; Hampton v. Levy, 1 McC. Ch. 107; Lang v. Brevard, 3 Strob. Eq. 59, Contra. See Jephsou v. Maunsell, 10 Ir. Eq. R. 38, 132; Pickens v. Finney, 20 Miss. 468. If a creditor holds collateral security in the form of a chose in action , anH "<\"-h' - gently fails to col lect it, the surety is discharged to t he ext ent of the loss due to the creditor's negligence, i'enuell v. McGowan, 58 Miss. 261 ; City Bank v. Young, 43 N. IT. 4U7, 482 (failure to give notice of dishonor to an indorser) ; Kemmerer v. Wil Bon, 31 Pa. 110; Shippen v. Clapp, 36 Pa. 89. — Ed. 1 The arguments of counsel are omitted and also so much of the case as does not relate to suretyship. — Ed. 6ECT. IV.] POLAK V. EVERETT. 207 Upon the authority of Pearl v. Deacon, which was affirmed, 1 must also hold that £97 10s., which was the produce of a collateral security for both debts, ought to be set off ratably against the amount due on the two notes, on one of which William Green was liable as surety. The result will be that one-half of the £1,500, or £750, will be the amount due from William Green, and from this must be deducted one- half of the £97 received for dividends, and one-half of the £97 10s. received in respect of the produce of the policy. This will leave a sum of £652 15s., as the balance of the debt due from William Green, to be deducted from his legacy of £1,000, and will leave £347 5s. due to him. 1 POLAK and Another v. EVERETT. In the Court of Appeal, February 10, May 2, 1876. [Reported in Law Reports, 1 Queen's Bench Division, 669.] This was an action on a guarantee entered into under the following circumstances : — The plaintiffs are wine merchants carrying on business in the city of London, and the defendant is a discount broker in business in the same city. In 1873, one Etienne Nazarkiewich had arranged to dispose of his business as a wine merchant to a limited liability company, to be called E. Nazarkiewich & Co. (Limited). At that time he was indebted to the plaintiffs in a sum of £8,400 ; and on the 20th of December, 1873, it was agreed between them that that amount should be liquidated in the following manner: £2,400 was to be paid by Nazarkiewich to the plaintiffs on or before the 15th of February, 1874 ; and £6,000 was to be paid in fully paid-up shares or share war- rants in " E. Nazarkiewich & Co." within three days after the first allot- ment of shares in that company, which Nazarkiewich was to redeem at par within twelve calendar months from the 1st of January, 1874; and the redemption was to be guaranteed by the defendant. It was also agreed that the book-debts of Nazarkiewich should be collected by one Vispe on behalf of Messrs. Tampier, of Bordeaux, and the plaintiffs, to be equally divided between them as collected ; the amount paid to the plaintiffs being applied towards the redemption of the £6,000 of shares. On the same day the defendant signed a written guarantee to the plaintiffs for the fulfilment by Nazarkiewich of the above agreement " so far only as concerns the full redemption of the shares and share * See Rainbow v. Juggiu, 5 Q. B. Div. 422, 424, per Bramwell, L. J. — Ed. 208 POLAK V. EVERETT. [CHAP. II. warrants therein mentioned of the value of £6,000 on or before the 1st day of January, 1875." The first allotment of shares in " E. Nazarkiewich & Co." took place on the 18th of February, 1874, but the £6,000 worth of shares was not transferred by Nazarkiewich to the plaintiffs within three days after that event. In May and June, 1874, negotiations were carried on between the plaintiffs, Nazarkiewich, and a Mr. Asser, one of the directors of E. Nazarkiewich & Co., for the repurchase b} r Nazarkiewich of the plaintiffs' share of his book-debts, and the transfer of them by him over to the company, and on the 1st of July, 1874, the plaintiffs gave a receipt to Nazarkiewich for fifteen fully paid-up shares in the company of £250 each, four acceptances for £250 each of the company dated the 26th of June, 1874, at thirty days, four months, six months, and nine months respectively, and £190 in cash, " in part discharge of our claim of £6,000, and provided the above bills are paid at maturity, we agree to release our charge or interest in the book-debts of Mr. Nazarkiewich." The defendant was the chairman of the company, but he did not agree to the repurchase and transfer to the company of Nazarkiewich's book-debts. The declaration in the first count set out the agreement of the 20th of December, 1873, between the plaintiffs and Nazarkiewich, and the guarantee of the defendant to the plaintiffs of the same date, and averred that Nazarkiewich had caused shares in the company to the nominal value of £3,750 to be issued to the plaintiffs, and that they had not been redeemed. The defendant pleaded, seventhly, upon equitable grounds, that the defendant was discharged b}' the agreement between the plaintiffs and Nazarkiewich for the transfer by the plaintiffs of their interest in his book-debts to the company ; and, eighthly, upon equitable grounds, that the defendant was discharged by the material variation without his knowledge of the terms of the agreement set out in the declaration. Issue, and demurrer and joinder to the seventh and eighth pleas. At the trial before Denman, J., the facts above set out were proved, and a verdict for the plaintiffs was taken bj- consent for the damages in the declaration, with leave to the defendant to move to enter it for him, or to reduce the damages to such sum as the Court might direct ; the Court to draw all necessary inferences of fact. 1 Mclnti/re, Q. C, and J. C. Mathew, in support of the motion, were stopped. Philbrick, Q. C, and R. E. Webster showed cause. Blackburn, J. We think that the defendant is entitled to judg- ment, on the ground that what has taken place has discharged him as a surety. 1 The statement of the case is taken from 24 W. R. 365. The argument for the plaintiffs and the concurring opinions of Mellor and Quain, JJ., are omitted — Ed. SECT. IV.] l'OLAK V. EVERETT. 209 Now, first, upon the leave reserved, with power for the Court to draw inferences of fact, we must take it to be the fact that though the defendant was well aware of this release being executed, he was not an assenting party to it. Then it is argued that knowledge on the part of the surety that there is going to be a release of a part of the security is enough without assent. I cannot see any authority for that. In Pickard v. Sears 1 it was held that he who stands by and sees another alter his position on the faith of a fact which he can contradict, cannot afterwards take advantage of that alteration. But the rule was corrected in Freeman v. Cooke, 2 where it was said that if a man stands by and allows another to act without objecting, when, from the usage of trade or otherwise, there is a duty to speak, his silence would pre- clude him as much as if he proposed the act himself. But to say that a person, who, being a surety, becomes aware that the creditor is going to give time or do something else which, if done without his assent, ma}' discharge him, is bound to warn the creditor against doing it, is a thing for which no authority whatever has been cited. That brings us to the question whether what was done in this case did, upon the established principles of equity, discharge the surety. It has been established for a very long time, beginning with Rees v. Berrington 3 to the present day, without a single case going to the contrary, that on the principles of equity a surety is discharged when the creditor, without his assent, gives time to the principal debtor, because by so doing he deprives the surety of part of the right he would have had from the mere fact of entering into the suretyship, namely, to use the name of the creditor to sue the principal debtor ; and if this right be suspended for a day or an hour, not injuring the surety to the value of one farthing, and even positively benefiting him, nevertheless, by the principles of equity, it is established that this discharges the surety altogether. The reason given for this, as stated in Samuell v. Howarth, by Lord Eldon, is because the creditor, by so giving time to the principal, has put it out of the power of the surety to consider whether he will have recourse to his remedy against the principal or not, and because he in fact cannot have the same remedy against the principal as he would have had under the original contract. And he adds : " The creditor has no right, it is against the faith of his contract, to give time to the principal, even though manifestly for the benefit of the surety, without the consent of the surety." The principle being, as I understand it, that as it is very undesirable that there should be any dispute or controversy about whether it is for his benefit or not, there shall be the broad principle, that if the creditor does intentionally violate any rights the surety had when he entered into the suretyship, even though the damage be nominal only, he shall forfeit the whole remedy. Whether that was a good or a just principle originally, is a matter which it is far too late to think about now. I » 6 Ad. & E. 469, 474. 2 2 Ex. 654. 3 2 Ves. 540. 14 210 POLAK V. EVERETT. JCHAP. U must own I have had considerable doubts about the justice of that prin- ciple, but from the time of Rees v. Berrington 1 it has been undisputed law, and nothing but the legislature can interfere to alter it. Now, in the present case the interference with the rights of the surety is not by giving time to the debtor, but it is equally as great an interference. The surety at the time he entered into the suretyship had a right to have these book-debts appropriated to reduce the prin- cipal debt, and that right he has been deprived of by the act of the creditor in releasing the book-debts to the person collecting them. That equitable right has been taken away by his wilful act, and in Mayhew v. Criekett, 2 upon this very question, Lord Eldon says: " When one surety has been discharged the co-surety is entitled to say to the creditor asserting a claim against him, You have discharged the surety from whom I ought to have compelled contribution, either in my own name in equity, or using your name at law." Lord Eldon is speaking here of withdrawing execution on a judgment; the precise amount does not appear, and it was possibly very small ; but it was held that the creditor having done this did discharge the surety, on a view which, according to Lord Eldon, is obvious in law and equity. Now, admitting this to be so, it has been argued by counsel for the plaintiffs that there is a distinction to be taken to this extent, as I understand their argument. The debt here secured — for it is really the same thing as if the debt were secured — is £6,000. Half of the book-debts only were pledged as an equitable security for this amount, and the)* were a secnrit)' for every portion of the £6,000, but if they paid 20^. in the pound the}' would only produce £4,000, so that there would be some £2,000 which would still remain for which the surety would have been liable ; and the argument is that the interference with the rights of the suret} - in respect to a matter which, though a security for the whole debt, is of less value than the whole debt, does not come within the principle and the authorities. As far as the authorities go, none were cited in which that distinction was taken. There does not seem to be the least authority for it on principle, once concede the rule that where the creditor wilfully interferes with the rights of the surety and alters the equitable rights which he had acquired, alters them, even though it maybe for the surety's benefit, — without the surety's assent, the surety is discharged. And it seems to me the prin- ciple must equally apply if he alters the surety's privilege of coming upon a security, being a security for the whole undivided debt, although of less value, as if he had altered a security of equal value with the whole debt. There are two or three distinctions to be taken notice of. For instance, there is Wulrf v. Jay, 8 — and that case was perfectly rightly decided, — where a person is a creditor with a pledge or surety he is in equity bound to account not only for the money he has actually made out of the pledge, but also for the moneys he might, ought, and should have made out of the pledge, and he must allow for that whether he made 1 2 Ves. 540. 2 2 Sw. 185, 193. 3 Law Rep. 7 Q. B. 756. SECT. IV.J WILBUR V. WILLIAMS. 211 them or not, and if by laches he has diminished the value of the pledge he is bound to allow for the sum he ought to have made. But his laches does not discharge the surety, for it does not come within the principle which applies where the surety's rights have been changed or varied. 1 lis rights remain as before. The case seems to be like the case where the creditor does not choose to sue the debtor. That does not discharge the surety, for the surety's right remains untouched. So in the case where there is a failure to make the most he could of the pledge, that does not in the slightest degree discharge the surety, though the amount which ought to have been recovered by making a proper use of it is to be allowed in reduction of the debt. In the present case it is not a ques- tion of laches, or not making the best of the pledge that could be made, but it is a case of preventing the surety having any recourse against these book-debts at all. There are other cases, but I do not think it is necessary to go into them. There is a distinction made in equitj' be- tween those rights of the surety which he acquired at the time when he entered into the suretyship, such as securities the creditor then held, and other rights, and he has a right to all those ; and Mayhew v. Crickett l establishes, if that security is destroyed, the debt is gone. There are other cases which turn upon this. After the security is es- tablished, the surety has a.right to have the benefit of new securities ; but those not being a part of the original right, it is a different question whether the dealing with those would discharge the suret}-. The present case does not come within that principle. Taking it as it stands here, it seems to me that the defence is made out, and consequently that the defendant should have judgment. On appeal, The Court (Jessel, M. R., Kelly, C. B., Mellish, L. J., and Den- man, J.) had no doubt that the view taken by the Queen's Bench Division was correct, and affirmed the judgment for the same reasons. Judgment affirmed. JOB WILBUR v. H. W. WILLIAMS. In the Supreme Court, Rhode Island, June 16, 1888. [Reported in 16 Rhode Island Reports, 242.] Defendant's petition for a new trial. Per Curiam. This is assumpsit on a check for eight}' dollars drawn by the defendant on the Traders' National Bank in favor of H. J. Robinson, and by him indorsed to the plaintiff. The action was begun in the District Court, taken by appeal to the Court of Common Pleas, where, upon trial by the Court, jury trial being waived, judgment was entered for the plaintiff. The case comes before us on petition for new trial on the ground that the judgment was against the evidence. 1 2 Sw. 193. 212 WILBUR V. WILLIAMS. [CHAP. II. The facts as they appeared in evidence were as follows, viz. : the understanding between the plaintiff and Robinson, when the plaintiff took the check, was that he should keep it for fifteen days. He did so keep it, and then presented it to the bank, which refused to pay it. He thereupon gave notice to the defendant and demanded payment from him. The bank then was, and still is, solvent. Robinson had ab- sconded the day before the check was presented, leaving many ques- tionable transactions behind. Robinson, when he ran away, had household furniture worth about twenty-five hundred dollars, on which the plaintiff held an unrecorded mortgage as security for Robinson's general indebtedness to him, including said check, which he had recorded immediately afterwards. The check had been given by the defendant to Robinson for his accommodation, on his representation that he had a friend who would put it in his drawer as cash, and that in a day or so he, Robinson, would redeem it. Robinson told the defendant, a day or two afterwards, that he had taken the check up and destroyed it. The defendant claims that he was discharged b} T the delay to present the check for payment. He does not claim to be discharged by reason of any failure of the bank, but on the ground that, if the check had been immediately presented, and he had had notice of the non-payment, he could have secured himself b} r paying the plaintiff and attaching the furniture, the mortgage upon which was then unrecorded, or by arrest- ing Robinson. It is, however, entirely uncertain whether, if the check had been earlier presented and payment refused, the plaintiff would not have had the mortgage earlier recorded, or whether, in such event, Robinson would not earlier have run away, and so avoided arrest. If the defendant was entitled to claim discharge on the ground of delay, for these reasons we think the question whether he was injured by the dela} T must be regarded as purely a question of fact, and we are not satisfied that the judgment was against the evidence on that point. It also appeared in evidence that, after the present action was begun, the plaintiff transferred his mortgage on Robinson's furniture, for two hundred twenty-five or two hundred fifty dollars, to Robinson's father, the plaintiff never having previously had possession of the mortgaged property. The defendant claims that, as accommodation drawer of the check, he was entitled to the privileges of a surety, the circumstances in which the plaintiff received the check being such as to give him notice of his relation to the drawee, and that he is therefore discharged by the transfer of the mortgage, under the decision of this Court in Otis v. Von Storch ; x but in Otis v. Von Storch the Court held that a surety will be discharged if the creditor surrenders or releases a security for the debts taken from the principal debtor to such debtor. That is not this case, for here there was no surrender of the securit}* to the principal debtor, but only a transfer of it to a third person. Such a 1 15 R. I. 41, 42. SECT. IV.] NEWCOMB V. RAYNOR. 213 transfer will not discharge a surety. 1 Wheatley v. Bastow ; 2 De Colyar on Guaranties, 440, 441. Such a transfer of a mortgage oper- ates also as a transfer of the debt secured b} T it. Jones v. Huggeford ; 8 Campbell v. Birch. 4 And the question might arise, whether, after such a transfer, the plaintiff would be entitled to continue to prosecute the action. There was, however, no evidence to show that he was prose- cuting it in fraud or against the will of the assignee. In the absence of such testimony the assignor is allowed to go on. Alsop v. Caines ; 5 Raymond v. Johnson ; fi Gardner v. Smith. 7 If it be the fact that the plaintiff is prosecuting the suit for himself, in violation of the rights of his assignee, the matter can be brought before the Court below by motion for a stay of execution, or other appropriate proceeding. Petition dismissed with costs. Simon S. Lapham, for plaintiff. William H. Siceetland, for defendant. NEWCOMB v. RAYNOR and Others. In the Supreme Court, New York, May, 1839. [Reported in 21 Wendell, 108.] Release of parties. The plaintiff declared in assumpsit on the money counts against Richard Raynor, Willett Raynor, and Josiah Wright, attaching to the declaration a copy of a promissory note, with notice that the same would be given in evidence under the money counts according to the statute. The note, of which a copy was given, purported to be made by Richard Raynor for $500, payable to Charles Goings or order, and indorsed by the payee, and by Willett Raynor and Josiah Wright. The defendants pleaded the general issue, and the cause was noticed for trial. At the circuit Willett Raynor and Josiah Wright interposed a plea of puis darrein continuance, that on, &c. , at, &c, the plaintiff b} - a release under seal discharged Charles Goings from all liability as indorser of the note. Wherefore they prayed judgment if the plaintiff ought further to have or maintain his action, &c. To this plea the plaintiff demurred. B. Davis Nbxon, for the plaintiff. M. T. Reynolds, for the defendants. By the Court, Nelson, C. J. I am of the opinion the plea consti- tutes a good bar to the action. As between the first and subsequent indorsers, the former must be regarded in the light of principal ; he Btands behind them upon the paper, and is bound to take it up, in case 1 Wheatley v. Bastow, 7 De G., M. & G. 261, Accord. — Ed. 2 7 De G., M. &G. 261, 279, 280. 8 3 Mete. 515. 5 10 Johns. Rep. 400. » 5 Heisk. (Tenn.) 256. « 60 N. Y. 214. 6 11 Johns. Rep. 488. ^ieML~u*^ ' U -^. Martin, 16 La. 133 ; La. Bank v. Le Doux, 3 La. An. 674; Page v. Webster, 15 Me. 249; Eaton v. Waite, 66 Me. 221; Sasscer v. Kemp, 6 Gill & J. 243, 249 ; Gray v. Farmers' Bank, 81 Md. 631 ; Frye v. Barker, 4 Pick. 382 ; Bellows v. Lovell,5 Pick. 307; Haydenville Bank v. Parsons, 138 Mass. 53 ; Inkster v. First Bank, 30 Mich. 143; Michigan Co. v. Soule, 51 Mich. 312 ; Routon v. Lacy, 17 Mo. 399; Freligh v. Ames, 31 Mo. 253; Smith v. Frayler, 4 Mont. 489; Quillen v. Quigley, 14 Nev. 215 ; Davis v. Huggins, 3 N. H. 231 ; Mahurin v. Pearson ; 8 N. H. 539 ; Morrison v. Citizens' Bank, 65 N. H. 253, 280 ; Manning v. ShotwelP 2 South. 584 ; Pinterd v. Davis, 1 Spencer, 205, 1 Zab. 632 ; Thompson v. Bowne, 39 N. J. 2 Bizzell v. Smith, 2 Dev. Eq. 27 (semble) ; First Bank v. Homesley, 99 N. Ca. RJ5CT VI.J TRIMBLE V. THORNE. 223 TRIMBLE v. THORNE. In the Supreme Court, New York, May, 1819. [Reported in 16 Johnson, 152.] This was an action of assumpsit, on a promissory note made by James Cunningham, dated the 20th of October, 1813, for $800, payable with interest, six months after date, at the bank of Orange count}', to the defendant, who indorsed it to the plaintiff. It was proved that the plaintiff had admitted that after the note fell due he had been requested by the defendant to prosecute Cunning- ham, which was not done ; and it was admitted that if Cunningham had then been prosecuted, the amount of the note could have been recovered of him. A verdict was found for the plaintiff, subject to the opinion of the Court on the above case. Spencer, C. J., delivered the opinion of the Court. We do not think the case of Pain v. Packard applies ; for the in- 531 ; Jenkins v. Clarkson, 7 Ohio, 72 ; Findley v. Hill, 8 Oreg. 247 ; Pickett v. Land, 2 Bail. 608 ; Caston v. Dunlap, Rich. Eq. Cas. 77 (but see Lang v. Brevard, 3 Strob. Eq. 59, 64-65) ; Hubbard v. Davis, 1 Aik. 296; Hogaboom v. Herrick, 4 Vt. 131; Baker v. Marshall, 16 Vt. 522; Hickok v. Farmers' Bank, 35 Vt. 476 ; Croughton v. Duval, 3 Call, 59 ; Harris v. Newell, 42 Wis. 687. Even where the doctrine of Pain v. Packard obtains, it does not cover the case of the surety's request and the creditor's refusal to distrain the debtor : Brooks v. Castor, 36 Ala. 682; Ruggles v. Holden, 3 Wend. 216 ; or to issue execution upon a judg- ment : Buckalew v. Smith, 44 Ala. 638 ; or to take out letters of administration upon the estate of the deceased principal debtor in order to sue : Brown v. Elanders, 80 Ga. 209. In Alabama the creditor does not lose his remedy against a surety by declining, on the latter's request, to enforce a mortgage. Branch Bank v. Perdue, 3 Ala. 409 ; Haden v. Brown, 18 Ala. 641. But see contra, Souter v. Bank, 94 Ga. 713 (semble); Remsen v. Beekman, 25 N. Y. 552. Statutory Provisions. In several States there are statutory provisions in regard to a request by a surety to the creditor to sue the debtor. Nearly all of such statutes require a request in writing, and, by some of them, failure to sue releases the surety even though the surety has suffered no loss by such failure. But there is no uni- formity in these statutes which are discussed in the following cases. Pickens v. Yar- borough, 26 Ala. 417 ; Savage v. Carletou, 33 Ala. 443 ; Derby v. Berney, 97 Ala. 643 ; Thompson v. Robinson, 34 Ark. 44 ; Bailey v. New, 29 Ga. 214 ; Fish v. Glover, 154 111. 86; Chrisman v. Tuttle, 59 Ind. 155; Barnes v. Sammon, 128 Ind. 596; Barnes v. Mowry, 129 Ind. 568 ; McMilliu v. Deardorff (Indiana Appeals, 1897), 48 N. E. R. 233 ; Thornburgh v. Madren, 33 Iowa, 380; Graham v. Rush, 73 Iowa, 451 ; Shenandoah Bank v. Ayres, 87 Iowa, 526 ; English v. Bourn, 7 Bush, 138 ; Medley v. Tandy, 85 Ky. 566 ; Taylor v. Davis, 38 Miss. 493 ; Brides v. Winters, 42 Miss. 135 ; Smith v. Clopton, 48 Miss. 66 ; Keirn v. Andrews, 59 Miss. 39 ; Routon v. Lacy, 17 Mo. 399; Langdon v. Markle, 48 Mo. 357 ; Petty v. Douglass, 76 Mo. 70 ; First Bank v. Homersburg, 99 N. Ca. 531 ; Jenkins v. Clarkson, 7 Ohio, 72 ; Baker v. Kellogg, 39 Ohio St. 663 ; Clark v. Osborn, 41 Ohio St. 28 ; Bailey Co. v. Seward (S. Dakota, 1896), 69 N. W. R. 58; Thompson v. Watson, 10 Yerg. 362 ; Sullivan v. Dwyer (Texas Civ. Ap. 1897), 42 S. W. R. 355; Harrison v. Price, 25 Grat. 553; Kittridge v. Stegmier, 11 Wash. 3; Gillilan v. Ludington, 6 W. Va. 128. — Ed. 224 THIMBLE V. THORNE. [CHAP. H dorser, though in the nature of a surety, is answerable upon an independent contract, and it is his duty to take up the bill when dishonored. 1 Judgment of nonsuit. 2 1 Ross v. Jones, 22 Wall. 576 ; Freligh v. Ames, 31 Mo. 253 ; Boatmen's Bank v. Johnson, 24 Mo. Ap. 316 ; Wells v. Maun, 45 N. Y. 327, 330 (semble) ; Colgrove v. Tall- man, 67 N. Y. 95, 99 (semble) ; First Bank v. Wood, 71 N. Y. 405, 411 ; Newcomb v. Hale, 90 N. Y. 326, 331 ; Converse v. Cook, 25 Hun, 44, 31 Hun, 417 ; Beebe v. West Bank, 7 W. & S. 375. Nor is one who assigns a chose in action, guaranteeing its payment, treated as a surety within the doctrine of Fain v. Packard. Wells v. Mann, 45 N. Y. 327 ; Newcomb v. Hale, 90 N. Y. 326. On the other hand the rule of Pain v. Packard applies to one who, although originally a principal debtor, has become in effect a surety through the assumption of his liability by another person. Colgrove v. Tallman, 67 N. Y. 95. But see contra, Fish v. Glover, 154 111. 86. In Pitts v. Congdon, 2 N. Y. 352, the Court carried the notion that an indorser is not a surety so far as to decide that the owner of a note who transferred it as an in- dorser continued liable for the full amount of the note, notwithstanding the holder's surrender to the maker of collateral security. — Ed. 2 The plaintiff failed for want of due notice of dishonor to the defendant. Every- thing is omitted except the opinion of the Court upon the point of request. — Ed. SECT. VII.] SOMEL'SALL V. BAIiNEBY. 225 SECTION VII. No Notice to Guarantor of Acceptance of the Guaranty. SOMERSALL v. THOMAS BARNEBY. In the King's Bexch, Michaelmas Term, 1611. [Reported in Croke, James, 287.] Assumpsit. Whereas communication was betwixt the plaintiff and defendant for and concerning credit to be obtained and given for Charles Fox ; that the defendant, in consideration of the premises, and in consideration that the plaintiff would be obliged for the said Charles in such sums of monej" and to such persons as the said Charles should desire of the plaintiff, assumed that he would discharge and save harmless the plaintiff of and concerning all such sums of money and all such debts as he should become bound to any person in, as surety, for his said son ; and allegeth in fact, that he, at the request of his son, 14 November, at such a place, became obliged, as surety for the said Charles for his debt to one Robert Clerk, in two hundred and forty pounds, with condition for the delivery of twenty foders of lead upon the twentieth da}- of May following ; the which twenty foders of lead, nor any part thereof, the said Charles did not deliver ; whereupon the bond was forfeited, and he compelled to pay the said two hundred and forty pounds for the debt of the said Charles to the said Robert Clerk. The defendant pleaded non assumpsit ; and found against him to his damages of two hundred and fifty pounds. And it was now moved in arrest of judgment, Fourthly, 1 Because it is not alleged that he gave notice unto the defendant of that bond, nor requested him to save him harmless from it ; and the defendant is a stranger thereto, and doth not know in what bonds the plaintiff is obliged with his said son ; and being a future thing to be entered into by the plaintiff, the defendant, being a stranger, ought to have notice thereof from him : but if it had been to save him harmless from bonds formerly entered into, it had been otherwise ; for there by intendment the defendant had as well cogniz- ance of them as the plaintiff. — Seel non allocatur ; for the Court said it was all one, and that he at his peril ought to take notice thereof. 2 Wherefore it was adjudged for the plaintiff. 8 1 Only what relates to this objection is here reprinted. — Ed. 2 See also Atkinson v. Rolfe, 1 Leon. 105. 3 Oxley v. Young, 2 H. Bl. 613; Lysaght v. Walker, 5 Bligh, n. s. 1, 19, 22-23; Oldershaw v. King, 2 H. &N. 399, 403, 517 ; White v. Woodward, 5 C. B. 810, 814,816 \semble) ; Fisk v. Stone, 6 Dak. 35; Carman v. Elledge, 40 Iowa, 409 ; Case v. Howard, 15 226 SOMEKSALL V. BARNEBY. [CHAP. II. 41 Iowa, 479 ; Davis Co. v. Mills, 55 Iowa, 543 ; Platter v. Green, 26 Kas. 252 ; Caton v. Shaw, 2 Har. & G. 13 ; Boyd v. Snyder, 49 Md. 325 (see also Heymau v. Dooley, 77 Md. 162); Crittenden v. Fiske, 46 Mich. 70; Wilcox v. Draper, 12 Neb. 138; Klosterman v. Olcott, 25 Neb. 382 ; Whitney v. Groot, 24 Wend. 82 ; Smith v. Dane, 6 Hill, 543; Union Bank v. Coster, 3 N. Y. 203; City Bank v. Phelps, 86 N. Y. 484 ; Niles Co. v. Reynolds, 4 N. Y. Ap. Div. 24; Powers v. Bumcratz, 12 Ohio St. 273 (overruling dictum in Taylor v. Wetmore, 10 Ohio, 490) ; Wise v. Miller, 45 Ohio St. 388; Bright v. McKnight, 1 Sneed, 158; Yancey v. Brown, 3 Sneed, 89; Wells v. Davis, 2 Utah, 411 ; McNaughton v. Couklin, 9 Wis. 316 (semble), Accord. Douglas v. Reynolds, 7 Pet. 113, 12 Pet. 497 ; Lee v. Dick, 10 Pet. 482; Adams v. Jones, 12 Pet. 207 ; Davis Co. v. Richards, 115 U. S 524 ; Burne v. Semmes, 4 Cranch C. C. 702 ; Hart v. Minchen, 69 F. R. 520 ; Barnes Co. v. Reed, 84 F. R. 603 ; Lawson i\ Townes, 2 Ala. 373 ; Walker v. Forbes, 25 Ala. 139 ; Fay v. Hall, 25 Ala. 709 ; Cahusac v. Samine, 29 Ala. 288 ; McCollum v. Cushing, 22 Ark. 540 ; Henderson v. Reilly, 1 McArth. 25 ; Rapelye v. Bailey, 3 Conn. 438 ; Craft v. Isham, 13 Conn. 28 ; Taylor v. McCluug, 2 Houst. 24; Buckingham v. Murray, 7 Houst. 176; Farmers' Bank v. Tatnall, 7 Houst. 287 ; Claflin v. Briant, 58 Ga. 414 ; Newman v. Streator Co., 19 111. Ap. 594; Ruffner v. Love, 33 111. Ap. 601 ; Mayer v. Ruhstadt, 66 111. Ap. 346 ; Milroy v. Quinn, 69 Ind. 406; Hasselman v. Japanese Co., 2 Ind. Ap. 180 (but notice not necessary in Indiana if guaranty is definite as to time and amount of payment. Kline v. Raymond, 70 Ind. 271 ; Snyder v. Click, 112 Ind. 293. See also Jackson v. Yaudes, 7 Blackf. 526; Nading v. McGregor, 121 Ind. 465) ; Kincheloe v. Holmes, 7 B. Mon. 5 ; Bell v. Keller, 13 B. Mon. 381 ; Lowe v. Beckwith, 14 B. Mon. 184; Sted- man v. Guthrie, 4 Met. (Ky.) 147; Thompson v. Glover, 78 Ky. 193 (semble); Eaton v. Harris (Kentucky, 1897), 43 S. W. R. 199 ; Illinois Bank v. Sloo, 16 La. 539 ; Men- ard v. Scudder, 7 La. An. 386 ; Lachman v. Block, 47 La. Au. 505 ; Norton v. East- man, 4 Me. 521 ; Seaver v. Bradley, 6 Me. 60 (semble) ; Tuckerman v. French, 7 Me. 115; Bradley v. Cary, 8 Me. 234; Howe v. Nickels, 22 Me. 175 (semble); Mussey v. Rayner, 22 Pick. 223 ; Allen v. Pike, 3 Cush. 238; Paige v. Parker, 8 Gray, 211 (semble); Bishop v. Eaton, 161 Mass. 496; Bascom v. Smith, 164 Mass. 61; Winne- bago Mills v. Travis, 56 Minn. 480; Straight v. Wight, 60 Minn. 515 (semble) ; Smith v. Anthony, 5 Mo. 504; Central Bank v. Shine, 48 Mo. 456; Taylor v. Shouse, 71 Mo. 361 (but see Davis Co. v. Jones, 61 Mo. 409) ; Mitchell v. Railton, 45 Mo. Ap. 273; Tolmau Co. v. Means, 52 Mo. Ap. 385 ; Hill v. Calvin, 5 Miss. 231 ; Montgomery v. Kellogg, 43 Miss. 486 ; Ellis v. Jones, 70 Miss. 60 ; McDougal v. Calef, 34 N. II. 534 (semble) (but see Bank v. Sinclair, 60 N. H. 100) ; Shewell v. Knox, 1 Dev. (N. Ca.) 404 (semble) ; Patterson v. Reed, 7 W. & S. 144 ; Kay v. Allen, 9 Barr, 320 ; Kellogg v. Stockton, 29 Pa. 460 ; Gardner v. Lloyd, 110 Pa. 278 ; Coe v. Buehler, 110 Pa. 366 ; Evans v. McCormick, 167 Pa. 247 ; Bay v. Thompson, 1 Pears. (Pa.) 551 ; King v. Batterson, 13 R. I. 117 ; Sollee v. Meugy, 1 Bail. 620 ; Lawton v. Maner, 9 Rich. 335; Wardlaw v. Harrison, 11 Rich. 626 ; Duncan v. Heller, 13 S. Ca. 94; Mayfield v. Wheeler, 37 Tex. 256 ; Wilkins v. Carter, 84 Tex. 438 ; Carter v. Wilkins (Tex. Civ. Ap. 1895), 29 S. W. R. 1102; Train v. Jones, 11 Vt. 444; Oaks v. Weller, 13 Vt. 106, 16 Vt. 63; Lowry v. Adams, 22 Vt. 160; Woodstock Bank v. Downer, 27 Vt. 539; Noyes v. Nichols, 28 Vt. 189, Contra. Reasonable Time. The notice of acceptance, when required at all, must be given in a reasonable time. The notice was deemed too late in Mussey v. Rayner, 22 Pick. 223 (two years and nine months) ; Allen v. Pike, 3 Cush. 238 (three years). The notice was held to be seasonable in Lowry v. Adams, 22 Vt. 160 (two months). In Seaver v. Bradley, 6 Me. 60, a delay of ten months was not fatal, the principal debtor continuing solvent. In Central Bank v. Shine, 48 Mo. 456, it was thought that fail- ure to give notice was immaterial if the guarantor was not thereby damaged. Mode of Notice. Notice by mail is sufficient even though it never reach the guarantor. Bishop v. Eaton, 161 Mass. 496. But see Hart v. Minchen, 69 F. R. 520 (leaving the question open). Waiver of Notice. Before Default. An express stipulation that the guarantor shall receive notice of the principal's default has been adjudged to imply a waiver SECT. VII.] M'lVER V. RICHAKDSON. 227 M'lVER and Another v. RICHARDSON. In the King's Bench, May 31, 1813. [Reported in 1 Muule 8f Selwyn, 557.] Lord Ellenborough, C. J., on this da}' delivered the judgment of the Court. 1 This was an action against the defendant as guarantor of D. Anderson & Co. for goods which the plaintiffs were about to supply to them, but hesitated so doing upon their credit alone; on which the defendant gave them the paper in question. Under what representation the defendant was induced to sign that paper we know not. The question mainly for our consideration was, whether the paper imports to be a perfect and conclusive guaranty, or only a proposition tending to a guaranty. And in the latter point of view the Court consider it. The paper was to this effect : — " Messrs. MTver & Co. " Gentlemen, — As I understand Messrs. David Anderson & Co., of Quebec, have given you an order for rigging, &c, which will amount to about four thousand pounds, I can assure you, from what I know of D. A.'s honor and probity, you will be perfectly safe in credit- ing them to that amount ; indeed I have no objection to guarantee you against any loss from giving them this credit. " (Signed) John Richardson. '•Liverpool, 12th March, 1811." We do not know on what kind of previous application the defendant signed it, nor is there any subsequent circumstance stated in the case from which it can be collected. The paper therefore must be con- strued according to the plain natural import of its terms. The im- port is, that the part}* signing it understood that Anderson & Co. had given an order for goods amounting to about £4,000 ; that this order of notice of acceptance. Wadsworth v. Allen, 8 Grat. 174. But see contra, Taylor v. McClung, 2 Houst. 24. After Default. A guarantor, discharged by the creditor's failure to give seasonable notice of acceptance of the guaranty (or of the default of the principal debtor) re- nounces his defence by a subsequent promise to pay. Gamage v. Hutchins, 23 Me. 565 ; Sigourney v. Wetterell, 6 Met. 553 ; Ashford v. Robinson, 8 Ired. 114. The sub- sequent promise operates here just as in the following cases where the surety, with knowledge of the creditor's agreement to give time to the principal, promised to pay. Stevens v. Lynch, 12 East, 38; Mayhew v. Crickett, 2 Sw. 185, 192, per Lord Eldon; Smith v. Winter, 4 M. & W. 454 ; Ellis v. Bibb, 2 Stew. (Ala.) 63, 70 ; First Bank v. Whitman, 66 111. 331 ; Montgomery v. Hamilton, 43 Ind. 45 1 (semble) ; Williams v. Boyd, 75 Ind. 286 ; Crutcher v. Trabue, 5 Dana, 80 ; Young v. New Farmers' Bank (Kentucky, 1897), 43 S. W. R. 473 ; Bishop v. Eaton, 161 Mass. 501 (semble) ; Porter v. Hodenpuyl, 9 Mich. 11 (semble) ; Hooper v. Pike (Minnesota, 1897), 72 N. W. R. 829 ; Merrimack Bank v. Brown, 12 N. H. 320 (semble); Fowler v. Brooks, 13 N. H. 240 (semble) ; Rochester Bank v. Chick, 64 N. H. 410 (semble) ; Bramble v. Ward, 40 Ohio St. 267 ; Dey v. Martin, 78 Va. 1 (semble) ; Fay v. Tower, 58 Wis. 286 (semble). But seecontra. Walters v. Swallow, 6 Whart. 446. — Ed. 1 Only the opinion of the Court is given. — Ed. 228 DAVIS V. WELLS. [CHAP. II remained unexecuted ; and then, as if a question had been put to the defendant respecting the honor and probity of Anderson & Co., the defendant says, " I can assure you from what I know of Anderson, you will be perfectly safe in crediting them to that amount ; " and then he adds, " indeed I have no objection to guarantee 3011 against any loss from giving them this credit : " which words import, that if application were made he would guarantee ; but no such subsequent application was made, indeed it appears that a guaranty was obtained from another house. A considerable period elapsed, and it was not made known to the defendant until the failure of Anderson & Co. that his paper had ever been communicated to the plaintiffs. Considering this as a mere overture to guarantee, it appears to us that the defendant ought to have had notice that it was so regarded, and meant to be accepted, or that there should have been a subsequent consent on his part to convert it into a conclusive guaranty. Under these circumstances, therefore, we think there must be Judgment of nonsuit} DAVIS v. WELLS. In the Supreme Court, United States, October, 1881. [Reported in 104 United States Reports, 159.] Error to the Supreme Court of the Territory of Utah. Mr. Justice Matthews delivered -the opinion of the Court. The action below was brought b} T Wells, Fargo, & Co., against the pwintiffs in error, upon a guaranty, in the following words : — " For and in consideration of one dollar to us in hand paid by Wells, Fargo, & Co. (the receipt of which is hereby acknowledged), we hereby guarantee unto them, the said Wells, Fargo, & Co., unconditionally at all times, an} 7 indebtedness of Gordon & Co., a firm now doing business at Salt Lake Cit}', Territory of Utah, to the extent of and not exceeding the sum often thousand dollars ($10,000) for any overdrafts now made, or that may hereafter be made at the bank of said Wells, Fargo, & Co. " This guarant}' to be an open one, and to continue one at all times to the amount of ten thousand dollars, until revoked by us in writing. " Dated, Salt Lake City, 11th November, 1874. " In witness whereof we have hereunto set our hands and seals the day and year above written. "Erwin Davis. [seal.] " Witness: J. Gordon." "J. N. H. Patrick, [seal.] 1 Symmon v. Want, 2 Stark. 371 ; Mozley v. Tinkler, 1 C, M. & R. 692 (" Gentle- men, Mr. France informed me that you are about publishing an arithmetic for him, and I have no objection to being answerable as far as £50. For my reference, apply to Messrs. Brooke & Co. of this place," signed Geo. Tinkler) ; Kastner v. Winstanley, 20 Up. Can. C. P. 101; Sutherland v. Patterson, 4 Ont. 565; Scribner v. Rutherford, 65 Iowa, 551 ; Stafford v. Low, 16 Johns. 67; Beekman v. Hale, 17 Johns. 134; Powers v. Bumcratz, 12 Ohio St. 273, 287, 288 (semble), Accord. — Ed. SECT. VII.] DAVIS V. WELLS. 229 The answer set up, by way of defence, that there was no notice to the defendants from the plaintiffs of their acceptance of the guaranty, and their intention to act under it ; and no notice after the account was closed, of the amount due thereon ; and no notice of the demand of payment upon Gordon & Co., and of their failure to pay within a reasonable time thereafter. But there was no allegation that by reason thereof any loss or damage had accrued to the defendants. On the trial it was in evidence, that this guaranty was executed by the defendants below, and delivered to Gordon on the day of its date, for delivery by him to Wells, Fargo, & Co., which took place on the same day ; that Gordon & Co. were then indebted to the plaintiffs below for a balance of over $9,000 on their bank account ; that their account continued to be overdrawn, Wells, Fargo, & Co. permitting it on the faith of the guaranty, from that time till July 31, 1875, when it was closed, with a debit balance of $6,200 ; that the account was stated and payment demanded at that time of Gordon & Co., who failed to make payment; that a formal notice of the amount due and demand of payment was made by Wells, Fargo, & Co., of the defend- ants below, on May 26, 1876, the day before the action was brought. There was no evidence of any other notice having been given in refer- ence to it ; either that Wells, Fargo, & Co. accepted it and intended to rely upon it, or of the amount of the balance due at or after the account was closed ; and no evidence was offered of any loss or damage to the defendants b} T reason thereof, or in consequence of the delay in giving the final notice of Gordon & Co.'s default. 1 The charge of the Court first assigned for error, and its refusal to charge upon the point as requested by the plaintiffs in error, raise the question whether the guaranty becomes operative if the guarantor be not, within a reasonable time, informed by the guarantee of his accept- ance of it and intention to act under it. It is claimed in argument that this has been settled in the negative by a series of well-considered judgments of this Court. It becomes necessary to inquire precisely what has been thus set- tled, and what rule of decision is applicable to the facts of the present case. In Adams v. Jones, 2 Mr. Justice Story, delivering the opinion of the Court, said: "And the question which, under this view, is presented, is whether, upon a letter of guaranty, addressed to a particular person or to persons generally, for a future credit to be given to the party in whose favor the guaranty is drawn, notice is necessary to be given to the guarantor that the person giving the credit has accepted or acted upon the guaranty and given the credit on the faith of it. We are all of the opinion that it is necessaiy ; and this is not now an open ques- tion in this Court, after the decisions which have been made in Russell 1 The statement of the case is abridged. — Ed. 2 12 Pet. 207, 213. 230 DAVIS V. WELLS. [CHAP. Ii. v. Clarke ; 1 Edmonston v. Drake ; 2 Douglass v. Reynolds ; 3 Lee v. Dick ; 4 and again recognized at the present term in the case of Rey- nolds v. Douglass. It is in itself a l'easonable rule, enabling the guar- antor to know the nature and extent of his liability ; to exercise due vigilance in guarding himself against losses which might otherwise be unknown to him ; and to avail himself of the appropriate means in law and equity to compel the other parties to discharge him from fur- ther responsibility. The reason applies with still greater force to cases of a general letter of guaranty ; for it might otherwise be impracticable for the guarantor to know to whom and under what circumstances the guaranty attached, and to what period it might be protracted. Trans- actions between the other parties to a great extent might from time to time exist, in which credits might be given and payments might be made, the existence and due appropriation of which might materiall}' affect his own rights and security. If, therefore, the questions were entirely new, we should not be disposed to hold a different doctrine ; and we think the English decisions are in entire conformity to our own." In Re3'nolds v. Douglass, 5 decided at the same term and referred to in the foregoing extract, Mr. Justice McLean stated the rule to be ' ' that, to entitle the plaintiffs to recover on said letter of credit, they must prove that notice had been given in a reasonable time after Baid letter of credit had been accepted by them to the defendants, that the same had been accepted ; " and he added: "This notice need not be proved to have been given in writing or in any particular form, but may be inferred by the jury from the facts and circumstances which shall warrant such inference." There seems to be some confusion as to the reason and foundation of the rule, and consequently some uncertainty as to the circumstances in which it is applicable. In some instances it has been treated as a rule, inhering in the very nature and definition of every contract, which requires the assent of a party to whom a proposal is made to be signi- fied to the party making it, in order to constitute a binding promise ; 6 1 7 Cranch, 69. 2 5 Pet. 624. 3 7 Pet. 113. 4 10 Pet. 482. 5 12 Pet. 497, 504. 6 Louisville Co. w. Welch, 10 How. 461,475 ; Barnes Co. v. Reed, 84 F. R, 603 ; New- man v. Streator, 19 111. Ap. 594; Ruffner v. Love, 33 111. Ap. 601 ; Kincheloe v. Holmes, 7 B. Mon. 5 ; Lachman v. Block, 47 La. An. 505 ; Howe v. Nickels, 22 Me. 175 ; Winne- bago Mills v. Travis, 56 Minn. 480 ; Mitchell v. Railton,45 Mo. Ap. 273 ; Kay v. Allen, 9 Barr, 320 ; Kellogg v. Stockton, 29 Pa. 460 ; Wilkins v. Carter, 84 Tex. 438, Accord. Contrast with this view the following statement by Bronson, J., in Smith v. Dann, 6 Hill, 544 : " The defendant invited the plaintiff to sell goods to Steel & Wall, on his promise to guarantee the payment of the debt. The plaintiffs assented, and delivered the goods. The proposition of one party was accepted by the other ; and according to our notions of the law this made a complete contract. Nothing further was necessary to its consummation. If the defendant wanted notice, and did not get it from the per- sons whom he thought worthy of credit, it was his business to inquire and ascertain what had been done. There is nothing in the defendant's undertaking which looks like a condition, or even a request, that the plaintiffs should give him notice if they acted upon the guaranty ; and there is no principle upon which we can hold that notice Was an essential element of the contract." — Ed. SECT. VII.] DAVIS V. WELLS. 231 in others it has been considered as a rule springing from the peculiar nature of the contract of guaranty, which requires, after the forma- tion of the obligation of the guarantor, and as one of its incidents, that notice should be given of the intention of the guarantee to act under it, as a condition of the promise of the guarantor. 1 The former is the sense in which the rule is to be understood as hav- ing been applied in the decisions of this Court. This appears very plainly, not only from a particular consideration of the cases themselves, but was formerly declared to be so by Mr. Justice Nelson, speaking for the Court in delivering its opinion in Louisville Manufacturing Co. v. Welch, 2 where he uses this language : " He [the guarantor] has already had notice of the acceptance of the guaranty and of the intention of the party to act under it. The rule requiring this notice within a rea- sonable time after the acceptance is absolute and imperative in this Court, according to all the cases ; it is deemed essential to an inception of the contract ; he is, therefore, advised of his accruing liabilities upon the guaranty, and may very well anticipate or be charged with notice of an amount of indebtedness to the extent of the credit pledged." And in Wildes v. Savage, 3 Mr. Justice Story, who had delivered the opinion in Douglass v. Reynolds, 4 after stating the rule requiring notice b}' the guarantee of his acceptance, said : " This doctrine, however, is inapplicable to the circumstances of the present case ; for the agree- ment to accept was contemporaneous with the guarant}', and, indeed, constituted the consideration and basis thereof." The agreement to accept is a transaction between the guarantee and guarantor, and completes that mutual assent necessary to a valid con- tract between them. It was, in the case cited, the consideration for the promise of the guarantor. And wherever a sufficient consideration of any description passes directly between them, it operates in the same manner and with like effect. It establishes a privity between them and creates an obligation. The rule in question proceeds upon the ground that the case in which it applies is an offer or a proposal on the part of 1 "The language relied on was an offer to guarantee, which the plaintiff might or might not accept. ... It was an offer to be bound in consideration of an act to be done, and in such a case the doing of the act constitutes the acceptance of the offer and furnishes the consideration. Ordinarily there is no occasion to notify the offerer of the acceptance of such an offer, for the doing of the act is a sufficient acceptance, and the promisor kuows that he is bound when he sees that action has been taken on the faith of his offer. But if the act is of such a kind that knowledge of it will not quickly come to the promisor, the promisee is bound to give him notice of his acceptance within a reasonable time after doing that which constitutes the acceptance. In such a case it is implied in the offer that, to complete the contract, notice shall be given with due diligence, so that the promisor may know that a contract has been made. But where the promise is in consideration of an act to be done, it becomes binding upon the doing of the act so far that the promisee cannot be affected by a subsequent withdrawal of it, if within a reasonable time afterward he notifies the promisor" (a). From the opinion of the Court, per Knowlton, J., in Bishop v. Eaton, 161 Mass. 499-500. — Ed. 8 10 How. 461, 475. 3 1 Story, 22. * 7 Pet. 113. (a) Oaks v. Weller, 13 Vt. 106, Accord. — Ed. 232 DAVIS V. WELLS. [CHAP. IL the guarantor, which does not become effective and binding as an obli- gation until accepted by the party to whom it is made ; that until then it is inchoate and incomplete, and may be withdrawn by the proposer. Frequently the only consideration contemplated is that the guarantee shall extend the credit and make the advances to the third person, for whose performance of his obligation, on that account, the guarantor undertakes. But a guaranty may as well be for an existing debt, or it may be supported by some consideration distinct from the advance to the principal debtor, passing directly from the guarantee to the guaran- tor. In the case of the guarant} 7 of an existing debt, such a consider- ation is necessary to support the undertaking as a binding obligation. In both these cases, no notice of assent, other than the performance of the consideration, is necessaiy to perfect the agreement ; for, as Pro- fessor Langdell has pointed out in his Summary of the Law of Con- tracts, 1 " though the acceptance of an offer and the performance of the consideration are different things, and though the former does not itnply the latter, yet the latter does necessarily imply the former ; and as the want of either is fatal to the promise, the question whether a.u offer has been accepted can never in strictness become material in those cases in which a consideration is necessary; and for all practical pur- poses it may be said that the offer is accepted in such cases by giving or performing the consideration." If the guarant}- is made at the request of the guarantee, it then be- comes the answer of the guarantor to a proposal made to him, and its delivery to or for the use of the guarantee completes the communication between them and constitutes a contract. The same result follows, as declared in Wildes v. Savage (supra), where the agreement to accept is contemporaneous with the guarant} 7 , and constitutes its consideration and basis. It must be so wherever there is a valuable consideration, other than the expected advances to be made to the principal debtor, which, at the time the undertaking is given, passes from the guarantee to the guarantor, and equally so where the instrument is in the form of a bilateral contract, in which the guarantee binds himself to make the contemplated advances, or which otherwise creates, bj r its recitals, a privity between the guarantee and the guarantor ; for in each of these cases the mutual assent of the parties to the obligation is either ex- pressed or necessarily implied. 2 1 Langdell's Cases on Contracts, 987. 2 Guaranty of Existing Debts or of Liabilities arising at the Moment the Guaranty is given. Bushnell v. Church, 15 Conn. 406; Chester;;. Leonard, 68 Conn. 495; Solary v. Stultz, 22 Fla. 263; Sanderson v. Etcherson, 36 Ga. 404; Wills v. Ross, 77 Ind. 1 ; Bechtold v. Lyon, 130 Ind. 194 ; Mitchell v. McClary, 42 Md. 374, Accord. Duncan v. Heller, 13 S. Ca. 94; Wilkins v. Carter, 84 Tex. 438, Contra. Guaranty in Consideration of $1. Taylor v. Tolman, 47 111. Ap. 264 ; Sears v. Swift, 66 111. Ap. 496 ; Furst Co. v. Black, 1 1 1 Ind. 308 ; Howe v. Nickels, 22 Me. 175 ; March v. Putney, 56 N. H. 34 ; Johnson v. Bailey, 79 Tex. 516, Accord. Farmers' Bank v. Tatuall, 7 Houst. 287, Contra. SECT. VII.] DAVIS V. WELLS. 233 The view we have taken of the rule under consideration, as requiring notice of acceptance and of the intention to act under the guaranty, only when the legal effect of the instrument is that of an offer or pro- posal, and for the purpose of completing its obligation as a contract, is the one urged upon us by the learned counsel for the plaintiff in error, who says, in his printed brief: " For the ground of the doctrine is not that the operation of the writing is conditional upon notice, but it is that until it is accepted, and notice of its acceptance given to the guarantor, there is no contract between the guarantor and the guaran- tee ; the reason being that the writing is merely an offer to guarantee the debt of another, and it must be accepted and notice thereof given to the party offering himself as security before the minds meet and he becomes bound. Until the notice is given, there is a want of mutual- ity : the case is not that of an obligation on condition, but of an offer to become bound not accepted ; that is, there is not a conditional con- tract, but no contract whatever.'' It is thence argued that the words in the instrument which is the foundation of the present action, — "we hereby guarantee unto them, the said Wells, Fargo, & Co., unconditionally, at all times," &c, — can- not have the effect of waiving the notice of acceptance, because they can have no effect at all except as the words of a contract, and there can be no contract without notice of acceptance. And on the suppo- sition that the terms of the instrument constitute a mere offer to guar- antee the debt of Gordon & Co., we accept the conclusion as entirely just. But we are unable to agree to that supposition. "We think that the instrument sued on is not a mere unaccepted proposal. It carries upon its face conclusive evidence that it had been accepted by Wells, Fargo, & Co., and that it was understood and intended to be, on delivery to them, as it took place, a complete and perfect obligation of guarant}'. That evidence we find in the words, " for and in consideration of one dollar to us paid by Wells, Fargo, & Co., the receipt of which is here- by acknowledged, we hereby guarantee," &c. How can that recital be true, unless the covenant of guaranty had been made with the assent of Wells, Fargo, & Co., communicated to the guarantors? Wells, Fargo, & Co. had not only assented to it, but had paid value for it, and that into the very hands of the guarantors, as they by the instrument itself acknowledge. It is not material that the expressed consideration is nominal. That point was made, as to a guarantee, substantially the same as this, in the case of Lawrence v. McCalmont, 1 and was overruled. Mr. Justice Story said : " The guarantor acknowledged the receipt of the one dol- Compare Barnes Co. v. Reed, 84 F. R. 603. Bilateral Contracts. Wildes v. Savage, 1 Story, 22 ; Bechtold v. Lyon, 130 Ind. 194 (semble) ; Cook v. Orne, 37 111. 186 ; Neagle v. Sprague, 63 111. Ap. 25 ; Lehigh Co. v. Scallen, 61 Minn. 63, Accord. — Ed. 1 2 How. 426, 452. 234 DAVIS V. WELLS. [CHAP. II. lar, and is now estopped to deny it. If she has not received it, she would now be entitled to recover it. A valuable consideration, how- ever small and nominal, if given or stipulated for in good faith, is, in the absence of fraud, sufficient to support an action on any pai*ol con- tract ; and this is equally true as to contracts of guaranty as to other contracts. A stipulation in consideration of one dollar is just as effec- tual and valuable a consideration as a larger sum stipulated for or paid. The very point arose in Dutchman y. Tooth, 1 where the guarantor gave a guaranty for the payment of the proceeds of the goods the guarantee had consigned to his brother, and also all future shipments the guaran tee might make in consideration of two shillings and sixpence paid him, the guarantor. And the Court held the guaranty good, and the con- sideration sufficient." It is worthy of note that in the case from which this extract is taken the guaranty was substantially the same as that in the present case, and that no question was made as to a notice of acceptance. It seems to have been treated as a complete contract by force of its terms. It does not affect the conclusion, based on these views, that the present guarant} T was for future advances as well as an existing debt. It cannot, therefore, be treated as if it were an engagement, in which the only consideration was the future credit solicited and expected. The recital of the consideration paid b}* the guarantee to the guarantor shows a completed contract, based upon the mutual assent of the par- ties ; and if it is a contract at all, it is one for all the purposes expressed in it. It is an entirety, and cannot be separated into dis- tinct parts. The covenant is single, and cannot be subjected in its in- terpretation to the operation of two diverse rules. Of course the instrument takes effect only upon delivery. But in this case no question was or could be made upon that. It was admitted that it was delivered to Gordon for delivery to the plaintiffs below, and that he delivered it to them. But if we should consider that, notwithstanding the completeness of the contract as such, the guaranty of future advances was subject to a condition implied by law that notice should be given to the guarantor that the guarantee either would or had acted upon the faith of it, we are led to inquire what effect is to be given to the use of the words which declare that the guarantors thereb}' " guarantee unto them, the said Wells, Fargo, & Co., unconditionally, at all times, airy indebted- ness of Gordon & Co., &c, to the extent and not exceeding the sum of ten thousa-nd dollars, for any overdrafts now made, or that hereafter ma} T be made, at the bank of said Wells, Fargo, & Co." Upon the supposition now made, the notice alleged to be necessary arises from the nature of such a guaranty. It is not and cannot be claimed that such a condition is so essential to the obligation that it 1 5 Bingham's New Cases, 577. BEGT. VII.] DAVIS V. WELLS. 235 cannot be waived. "We do not see, therefore, what less effect can be ascribed to the words quoted than that all conditions that otherwise would qualify the obligation are by agreement expunged from it and made void. The obligation becomes thereby absolute and unqualified ; free from all conditions whatever. This is the natural, obvious, and ordinary meaning of the terms employed, and we cannot doubt that they express the real meaning of the parties. It was their manifest intention to make it unambiguous that Wells, Fargo, & Co., for any indebtedness that might arise to them in consequence of overdrafts by Gordon & Co., might securely look to the guarantors without the per- formance on their part of anj- conditions precedent thereto whatever. It has always been held in this Court that, notwithstanding the con- tract of guaranty is the obligation of a surety, it is to be construed as a mercantile instrument in furtherance of its spirit and liberally, to promote the use and convenience of commercial intercourse. This view applies with equal force to the exceptions to the other charges and refusals to charge of the Court below. These exceptions are based on the propositions, — 1. That if Wells, Fargo, & Co. neglected to notify the defendants below of the amount of the overdraft within a reasonable time after closing the account of Gordon & Co. ; and, 2. That if they failed within a reasonable time after demand of pa} T - ment made upon Gordon & Co., to notify the defendants of the default, the plaintiffs could not recover upon the guaranty. For if the necessity in either or both of these contingencies existed to give the notice specified, it was because the dut} T to do so was, by construction of law, made conditions of the contract. But by its terms, as we have shown, the contract was made absolute, and all conditions were waived. It is undoubtedly true, that if the guarantee fails to give reasonable notice to the guarantor of the default of the principal debtor, and loss or damage thereby ensues to the guarantor, to that extent the latter is discharged ; but both the laches of the plaintiff and the loss of the de- fendant must concur to constitute a defence. If an}- intermediate notice, at the expiration of the credit, of the extent of the liability incurred is requisite, the same rule applies. 1 Such 1 In jurisdictions where notice of acceptance of a guaranty is required, failure to give notice, within a reasonable time after the close of the transactions under a continuing guaranty, of the amount advanced thereunder will discharge the guarantor, unless it appears that the guarantor was not prejudiced by the creditor's laches. Douglas v. Reynolds, 7 Pet. 113 (semble) ; Louisville Co. v. Welch, 10 How. 461 ; Cremer v. Hig- ginson, 1 Mas. 323 ; Wildes v. Savage, 1 Story, 22, 33 (semble) ; Craft v. Isham, 13 Conn. 28; Davis Co. v. Mills, 55 Iowa, 543; Singer- Co. v. Littler, 56 Iowa, 601 ; Howe v. Nickels, 22 Me. 175; Babcock v. Bryant, 12 Pick. 133; Courtis r. Dennis, 7 Met. CIO; Clark v. Remington, 11 Met. 361; Paige v. Parker, 8 Gray, 211; Whiting v. Stacy, 15 Gray, 270; Montgomery v. Kellogg, 43 Miss. 486: Beebe v. Dudley, 26 N. H. 249; Bay v. Thompson, 1 Pears. 551. But see contra, Cahusac v. Samini, 29 Ala. 288; Lowe v. Beckwith, 14 B. Mon. 184 -Ed. 236 MAYNARD V. MORSE. [CHAP. II. was the express decision in Louisville Manufacturing Co. v. Welch, supra. An unreasonable delay in giving notice, or a failure to give it altogether, is not of itself a bar. There was a question made at the trial as to the meaning of the word "overdrafts," as used in the guaranty. It was contended that it would not include the debit balance of account charged to Gordon & Murray, and assumed by Gordon & Co., as their successors, before the guaranty was made, nor charges of interest accrued upon the balances of Gordon & Co.'s account, which were entered to the debit of the account. The reason alleged was, that no formal checks were given for these amounts. The point was not urged in argument at the bar, and was very properly abandoned. The charges were legitimate and correct, and the balance of the account to the debit of Gordon & Co. was the overdraft for which they were liable. There could be no doubt that it was embraced in the guaranty. We find no error in the record. Judgment affirmed. C. B. MAYNARD v. JAMES MORSE and AARON MORSE. In the Supreme Court, Vermont, January Term, 1864. [Reported in 36 Vermont Reports, 617.] Assumpsit upon the following contract: " Hydepark, July 17, 1855. For value received we jointly and severally promise to pay C B. May- nard, or order, any sum of money that James Morse may be indebted to said Maynard up to the 1st day of November next, said sum not to exceed five hundred dollars at any one time and interest. James Morse. Aaron Morse." Plea, the general issue. Trial by jury, at the September Term, 1863, Aldis, J., presiding. The plaintiff in- troduced this contract, and then proceeded to show that James Morse was justly indebted to the plaintiff, up to November 1st, 1855, in the sum of $500. The only exception taken was upon this point, viz., The defendant Aaron Morse, who signed the contract as surety for James Morse, claimed that the contract aforesaid was a mere guaranty, and that Aaron Morse was entitled to notice of the acceptance of the said guaranty by Maynard, and that the plaintiff acted upon it in allowing the defendant James Morse to become indebted to him to the aforesaid amount of $500. But the Court ruled otherwise, and under this ruling the defendant Aaron Morse submitted to a verdict for the plaintiff, and excepted to the decision of the defendant. Edson & Rand, for the defendant. W. C. Wilson and H. S. Boyce, for the plaintiff. Barrett, J. The question is not, whether James Morse could become a guarantor, in the commercial sense, for his own debt, nor SECT. VII.] MAYNAKD V. MORSE. 237 whether, if Aaron Morse had individually executed such a paper as the present, he would have been a guarantor of James, in the commercial sense, and thereupon been entitled to notice that the guaranty had been acted upon. But it is whether, by force of the instrument in this case, the de- fendants became bound to perform according to its stipulation, upon its being received by the plaintiff for property or money advanced to James. The defendants, by this paper, assume a joint obligation, to become operative upon a specified event, as constituting the consideration. If such consideration be valid to give the instrument effect as to either, it gives it effect as to both ; and it is not allowable for one of the obli- gors to claim exemption on the score of some peculiar relation that he, in fact, sustained to his fellow ; unless the obligee has been guilty of some fraud, or bad faith, that would avoid the obligation assumed by the tenor of the contract. There is no question but that the obligation of the paper became effectual as to James Morse, when the plaintiff took it and advanced property to him on the strength of it. We have not been apprised of any principle or case which distinguishes between joint obligors or promisors in respect to their respective liability to the obligee or promisee, where the undertaking is for the same thing and upon the same consideration. We see no occasion to discuss the subject of notice to a guarantor, as involved in many of the cases, — for we do not think it is involved in this beyond the notice operated by the fact that James Morse passed off the paper for property advanced just as the paper was upon its face intended to be used ; and the effect of this act was the same as to both the joint makers of the instrument. If that act be treated in the nature of notice of the acceptance of the paper, then by force of the joint relation of the defendants, it operated upon both to every legal intent of fixing the liability of both. The judgment is affirmed. 1 1 See to the same effect Hall v. Weaver, 34 F. R. 104; McMillan v. Bull's Head Bank, 32 Ind. 11 ; Bryant v. Stout, 16 Ind. Ap. 380 (explaining La Rose v. Bank, 102 Ind. 532); Bank v. Kercheval, 2 Mich. 504; Cox v. Machine Co., 57 Miss. 350, in which oases the surety and principal joined in the execution of a bond ; and Saint v. WheeXsr, 95 Ala. 362, where the joint ohligation was a covenant. — Ed. 238 BKOOKBAiS T K V. TAYLOK. [CHAP. II. SECTION VIII. No Notice to Guarantor of Default of Principal Debtor, ■ BROOKBANK v. TAYLOR. In the Exchequer Chamber, Hilary Term, 1624. [Reported in Croke, James, 685.] Assumpsit. Whereas the plaintiff, at the defendant's request, 20 April, 19 Jac. I., demised to one John Jennings his house in London for a 3'ear a prcedicto 20 Aprilis, 19 Jac. I., rendering fifty shillings quarterly ; that the defendant promised, if the said Jennings did not pay the rent, that he would pa} - it ; and allegeth in fact, quod virtute dimissionis he entered the aforesaid 20 April, 19 Jac. L, and was possessed, and had not paid the rent ; and that the defendant, licet re- quisitus, had not paid it. The defendant pleaded non assumpsit; and found against him ; and the jury find damages occasione assumptionis prcedict. to five pounds ; and judgment thereupon ; and error thereupon in the Exchequer Chamber. The second 1 error assigned was, because it is not alleged that notice was given that the other had not paid. Sed non allocatur ; for he at his peril ought to take cognizance of the non-payment and pay the rent, otherwise the promise is broken. Wherefore the judgment was affirmed. 2 1 Only what relates to this error is here reprinted. — Ed. 2 guaranty of a Definite Payment or Performance at a Definite Time. Voltz v. Harris, 40 111. 155 ; Tavlor v. Taylor, 64 Ind. 356 ; Frash v. Polk, 67 Ind. 55 ; Kline v. Ray- mond, 70 Ind. 271 ; Shearer v. Peele, 9 Ind. Ap. 282 (but see Virden v. Ellsworth, 15 Ind. 144 ; Gaff v. Sims, 45 Ind. 262 ; Ward v. Wilcox, 100 Ind. 52 ; Snyder v. Click, 1 1 2 Ind. 293) ; Douglass v. Howland, 24 Wend. 35 ; Van Rennselaer v. Miller, Hill & D. 237 ; Barhydt v. Ellis, 45 N. Y. 107 (semble) ; Cordier v. Thompson, 8 Daly, 172 ; Weiler v. Henarie, 15 Oreg. 28; Bank v. Hammond, 1 Rich. 281 ; Savings Bank v. Strother, 28 S. Ca. 504 ; Hunter n. Dickinson, 10 Humph. 37 (but see Kannon v. Neely, 10 Humph. 288 ; Rhodes v. Morgan, 1 Baxt. 360); Mallory v. Lyman, 3 Finn. (Wis.) 443, Accord. Ringgold v. Newkirk, 3 Ark. 96 ; Vinal v. Richardson, 13 All. 521, contra. Guaranty of Payment or Performance Indefinite in Amount, or at an Indefinite Time. Treweek v. Howard, 105 Cal. 434 (statutory) ; Hammond v. Gilmore, 14 Conn. 479 ; Bushnell v. Church, 15 Conn. 406; Redfiehl r. Haight, 27 Conn. 31 ; Kincheloe v. Holmes, 7 B. Moii. 5 {semble); Lowe v. Beckwith, 14 B. Mon. 184; Heyman v. Dooley, 77 Md. 162 (semble) ; Farmers' Bank v. Kercheval, 2 Mich. 504 (semble) ; Grant v. Hotchkiss, 26 Barb. 63 ; Clark v. Burdett, 2 Hall, 197; Yancey t\ Brown, 3 Sneed, 89 ; Train v. Jones, 11 Vt. 444 ; Noyes v. Nichols, 28 Vt. 159, Accord. But in some jurisdictions the guarantor is discharged to the extent of any loss that would result to him by the creditor's failure to give reasonable notice of the prin- SECT. VIII.] HUNGEIIFORD V. O'BKIEN. 239 C. HUNGERFORD v. J. K. O'BRIEN, Impleaded, etc. In the Supreme Court, Minnesota, July 27, 1887. [Reported in 37 Minnesota Reports, 306.] Dickinson, J. 1 ' 2 The defendant Sawbridge made his negotiable promissory note, which was indorsed to one Gage, who indorsed it in blank to the defendant O'Brien, and he, before maturity, transferred it for value to the plaintiff, indorsing upon the note and signing this guaranty: "For value, I hereby guarantee the payment of the within note to Cassie Hungerford or bearer." The note was not paid. Noth- ing was done by the plaintiff at the maturity of the note to fix the lia- bility of the indorser Gage. The defendant O'Brien had no notice of the non-payment of the note until more than a year after its maturity. Upon the trial of the issue raised by the answer of the defendant O'Brien, evidence was presented tending to show that the maker of the note was solvent at the time of its maturity, but has since become insolvent ; and that the indorser, Gage, was also solvent. The Court directed a verdict for the plaintiff. The nature of the obligation of the guarantor is affected by the character of the principal contract to which the guaranty relates. The note expressed the absolute obligation of the maker to pay the sum named at the specified date of maturity or before. The guaranty of "the payment of the within note" imported an undertaking, without condition, that, in the event of the note not being paid according to its cipal's default. Reynolds v. Douglas, 12 Pet. 497 (qualifying s. c. 7 Pet. 113); Wildes v. Savage, 1 Story, 22 (semble) ; Dunbar v. Brown, 4 McL. 166; Walker v. Forbes, 25 Ala. 139 ; Cahusac v. Samini, 29 Ala. 288 ; McCollum v. Cusliing, 22 Ark. 540 ; May- burv v. Bainton, 2 Harringt. 24 ; Taussig v. Reid, 145 111. 488 ; Smith v. Bainbridge, 6 Blackf. 12 ; Furst Co. v. Bradley, 111 Ind. 308 (but see Kirby v. Studebaker, 1-5 Ind. 45; Nading v. McGregor, 121 Ind. 465); Davis Co. v. Mills, 55 Iowa, 543; Howe v. Nickels, 22 Me. 175 ; Clark v. Remington, 11 Met. 361 ; Vinal v. Richardson, 13 All. 521 (semble) ; Bishop v. Eaton, 161 Mass. 496, 501 ; Montgomery v. Kellogg, 43 Miss. 486 ; Rankin v. Childs, 9 Mo. 665 ; Sullivan v. Field, 118 N. Ca. 358. In Pennsylvania an odd distinction prevails. A general guaranty of payment or per- formance is treated like a guaranty of collectibility. Johnston v. Chapman, 3 Pen. & W. 18 ; Isett v. Hoge, 2 Watts, 128 ; Hoffman v. Bechtel, 52 Pa. 190 ; Nat. Society v. Lichten- walner, 100 Pa. 100; Tissue v. Hanna, 158 Pa. 384: Ritchie v. Walter, 166 Pa. 604 (semb/e). But a guaranty of faithful performance or of payment when due is regarded as the undertaking of a surety who becomes absolutely liable immediately on the de- fault of the principal, no diligence of any kind being required. Campbell v. Baker, 46 Pa. 243 ; Reigart v. White, 52 Pa. 438 ; Boschert v. Brown, 72 Pa. 372 ; Korn v. Hohl, 80 Pa. 333; Sherman v. Roberts, 1 Grant, 261; Cochran v. Dawson, 1 Miles, 276; Girard Co. v. Finley, 1 Phila. 70. In accordance with this distinction, a promise to be " security " for payment or performance of another is treated as the undertaking of a surety. Marberger v. Pott, 16 Pa. 9 ; Allen v. Hubert, 49 Pa. 259; Ashton v. Bayard, 71 Pa. 139 (overruling Gilbert v. Henck, 30 Pa. 205). — Ed. 1 Berry, J., because of illness, took no part in this case. 2 Only the opinions of the judges are given. — Ed. 240 HUNGERFORD V. O'BRIEN. [CHAP. II. terms, — that is, at maturity, — the guarantor should be responsible. The non-payment of the note at maturity made absolute the liability of the guarantor, and an action might at once have been maintained against him without notice or demand. 1 Such was the effect of the unqualified guaranty of the payment of an obligation which was in itself absolute and perfect and certain as respects the sum to be paid, and the time when payment should be made, — all of which was known to the guarantor, and appears upon the face of the contract. The liability of the guarantor thus becoming absolute by the non-payment of the note, the neglect of the holder to pursue such remedies as he might have against the maker (the guarantor not having required him to act) would not discharge the alreadj' fixed and absolute obligation of the guarantor, nor would neglect to notify the guarantor of the non- 1 Walton v. Mascall, 13 M. & W. 72, 452 (but see Warrington v. Furber, 8 East, 242 ; Holbrow v. Wilkins, 1 B. & C. 10 ; Hitchcock v. Humphrey, 5 M. & G. 559) ; Lee v. Dick, 10 Pet. 482, 496 ; N. Y. Co. v. Lombard Co., 73 F. R. 537 (semble) ; Donley v. Camp, 22 Ala. 659 ; Killian v. Ashby, 24 Ark. 51 1 ; First Bank o. Babcock, 94 Cal. 96 ; Williams v. Granger, 4 Day, 444 ; Breed v. Hillhouse, 7 Conn. 523 ; Clark v. Morison, 25 Conn. 576 ; City Bank v. Hopson, 53 Conn. 453 ; Tyler v. Waddingtou, 58 Conn. 375 (but see Sage v. Wilcox, 6 Conn. 81) ; Wright v. Shorter, 56 Ga. 72; Gammell v. Parsons, 58 Ga. 54 ; Gage v. Mechanics' Bank, 79 111. 62 ; Stowell v. Raymond, 83 HI. 120; Hooker v. Gorring, 86 111. 60 ; Taussig v. Bird, 145 111. 488, 491-492 ; Pool v. Roberts, 19 111. Ap. 438 ; Burnham v. Gallentine, 11 Ind. 295; Studebaker v. Cody, 54 Ind. 586; Levi v. Mendall, 1 Duv. 77; Gasquet v. Thorn, 14 La. 506 ; Roberts v. Hawkins, 70 Mich. 566; Threshers. Ely, 10 Miss. 139; Tatum v. Bonner, 27 Miss. 760 ; Baker v. Kelly, 41 Miss. 696 ; Holmes v. Preston, 71 Miss. 541 ; Wright v. Dyer, 48 Mo. 525; Barker v. Scudder, 56 Mo. 272; Burrus v. Davis, 67 Mo. Ap. 210 ; Huff v. Slife, 25 Neb. 448 ; Flentham v. Steward, 45 Neb. 640 (but see Newton Co. v. Diers, 10 Neb. 284) ; Bank v. Sinclair, 60 N. H. 100 (but see Simmons v. Steele, 36 N. H.' 73) ; Allen v. Rightmere, 20 Johns. 365 ; Brown v. Curtiss, 2 N. Y. 225 ; Bartholomew v. Seaman, 25 Hun, 619 ; Kenny v. Maseman, 14 Daly, 379 ; Clay v. Etlgerton, 19 Ohio St. 549; Neil v. Trustees, 31 Ohio St. 15, 22; Taylor v. Ross, 3 Yerg. 330 (but see Rhodes v. Morgan, 1 Baxt. 360) ; Woodstock Bank v. Downer, 27 Vt. 539 ; Ten Eyck v. Brown, 3 Pinn. (Wis.) 452 ; Hoover v. McCormick, 84 Wis. 215, Accord. But in some jurisdictions failure to make due demand on the maker of a note and to give notice of dishonor to the guarantor, will discharge the latter to the extent of any damage due to such laches. Lewis v. Brewster, 2 McL. 21 ; Foote v. Brown, 2 McL. 369 ; Fuller v. Scott, 8 Kas. 25 ; Withers v. Berry, 25 Kas. 373 ; Gamage v. Hutchins, 23 Me. 565 ; Bank v. Small, 25 Me. 366 ; Oxford Bank v. Haynes, 8 Pick. 423 ; Talbot v. Gay, 18 Pick. 534 ; Whiton v. Mears, 11 Met. 563 ; Vin'al v. Richard- son, 13 All. 521, 530; Bishop v. Eaton, 161 Mass. 496, 501 (semble) ; Simons v. Steele, 36 N. H. 73 (semble); Grice v. Ricks, 3 Dev. 62 ; Farrow v. Respess, 11 Ired. 170; Cox v. Brown, 6 Jones (N. Ca.), 1 00, Contra. See Savings Bank v. Strother, 28 S. Ca. 504. In Iowa the guarantor of a note is discharged to the extent of damage resulting from the laches of the holder, but a distinction is taken as to the burden of proof. H the guaranty is by a stranger to the note, the plaintiff must allege and prove diligence or the absence of damage to the guarantor. Sabine v. Harris, 12 Iowa, 87 ; Knight v. Dunsmore, 12 Iowa, 35 ; Picket v. Hawes, 14 Iowa, 460. But if the payee or assignee makes the guaranty, he must establish affirmatively the holder's laches and damage to himself. Peck v. Frink, 10 Iowa, 193; Marvin v. Adamson, 11 Iowa, 371 ; Greene v. Thompson, 33 Iowa, 293 ; Second Bank v. Gaylord, 34 Iowa, 246 ; Martyn v. Lamor, ?5 Iowa, 235. — Ed. SECT. VIII. J HUNGERFORD V. O'BRIEN. 241 payment have such effect. Brown v. Curtiss ; a Allen v. Rightmere ; a Newcomb v. Hale; 8 Read v. Cutts; 4 Breed v. Hillhouse ; 5 Campbell v. Baker ; 6 Roberts v. Riddle ; 7 Bank v. Sinclair ; 8 Heaton v. Hulbert ; 9 Dickerson v. Derrickson ; 10 Fenny v. Crane Mfg. Co ; " Clay v. Edger- ton ; 12 Wright v. Dyer. 13 See also Vinai v. Richardson, 14 modifying former decisions of the same Court. It follows that the fact that the maker had become insolvent since maturity, or that a mortgage security had become impaired by depre- ciation in the value of the property, was no defence ; nor was it a defence that the guarantor was not notified of the non-payment of the note. We are aware that the position here taken is opposed by some decisions. No valid agreement was shown between the maker and the plaintiff extending the time of payment. From the position above taken, it logically follows that the neglect of the guarantee to take the steps necessary to fix the liability of the indorser, Gage, did not discharge the guarantor. The latter, by his unqualified guaranty of the payment of the note, took it upon himself to see that the note was paid, and was therefore not entitled to notice of its non-payment. (Authorities above cited.) For the same reason, the plaintiff did not owe to the guarantor the duty of taking the steps necessary to fix the contingent liability of the indorser by demand and notice of dishonor. Philbrooks v. McEwen ; 15 Lang v. Brevard ; 16 Pickens v. Finney. 17 No such obliga- tion is involved in this contract of guaranty. Even in the case of an ordinary indorsement, the holder, at maturity, is under no obligation to his indorser to give notice of dishonor to prior indorsers or parties. 18 The last indorser becomes liable when he alone is notified, and he in turn may fix the liability of prior parties by giving notice to them. Order affirmed. 19 Mitchell, J. (dissenting). I am unable to concur in the proposi- tion that the plaintiff owed no duty to O'Brien to take steps, at the maturity of the note, to fix the liability of Gage, the indorser. It does i 2 N. Y. 225. 9 3 Scam. 489. 2 20 John. 365. 10 39 111. 574. 3 90 N. Y. 326. u 80 111. 244. « 7 Greenl. 186. 12 19 Ohio St. 549. 5 7 Conn. 523. 13 48 Mo. 525. 6 46 Pa. St. 243. 14 13 Allen, 521. 7 79 Pa. St. 468. 15 29 Ind. 347. 8 60 N. H. 100. 16 3 Stroh. Eq. (So. Car.) 59. » 12 Smedes & M. 468. 18 Rickford v. Ridge, 2 Camp. 537 ; Spencer v. Ballou, 18 N. Y. 327 ; Baker v. Morris, 25 Barb. 138 ; Deck v. Works, 18 Hun, 266, 272, Accord. —Ed. 19 Green v. Thompson, 33 Iowa, 293 ; Deck v. Works, 18 Hun, 266, Accord. Philips v. Astling, 2 Taunt. 206; Vinal v. Richardson, 13 All. 521, 532 (sembl'); City Bank v. Young, 43 N. H. 457, 462; Bank v. Sinclair, 60 N. H. 100, 107 {semble) ; Brown v. Curtiss, 2 N. Y. 225, 228 (semble) ; Gibbs v. Cannon, 9 S. & R. 198 (semble), Contra. See also, as to the effect of laches in collecting a chose in action held as collateral security, supra, 205, n. 1, ad Jinem. — Ed. :s 242 HUNGERFORD V. O'BRIEN. [CHAP. IL not seem to me that the fact that O'Brien's guaranty of payment was unconditional and absolute is at all decisive of the question. As be- tween the parties to this action, O'Brien occupied the position of surety, who, in case he had to pa}- the note, would have recourse against Gage, the indorser, provided steps were taken to fix the liability* of the latter. The question, therefore, is to be determined by the equitable principles which govern the relative rights and duties of creditor and surety. It is a well-settled rule of equity that an}- laches b} 1 the creditor in the care or management of collateral remedies or securities, if loss ensues, will discharge the suretj 7 pro tanto. Nelson v. Munch. 1 As a surety, on payment of the debt, is entitled to all the securities of the creditor, if, through the negligence of the creditor who has them in his possession and under his control, a security, to the benefit of which the suret}' is entitled, is lost or not properly perfected, the surety, to the extent of such security, will be discharged. Wulff v. Ja}-. 2 And we can see no difference in this respect whether the security is chattel or personal. This is not a case of mere passiveness bj' the creditor in not taking steps to enforce collection of the debt at maturit}', but an omis- sion to take steps to perfect and fix the liability of the indorser. which amounted to positive negligence. He had possession and control of the note on the day of its maturity, and consequently was the only per- son who could present it for pa} r ment, or who would know whether or not it was paid, and hence was the only person in position to give notice to the indorser in case of its non-payrnent. To require him to do this, would, I think, be both good business morals and good law. 1 28 Minn. 314, 322. 2 L. E. 7 Q. B. 756. SECT. IX. j DAVIUSOX V. COOPER. 243 SECTION IX. Alteration of Principal* 's Contract, or Variation of Surety's Risk. DAVIDSON, Public Officer, &c, u. COOPER and Another. In the Exchequer Chamber, July 6, 1844. [Reported in 13 Meeson 8f Welsbtj, 343.] Lord Denman, C. J. 1 This was a declaration in assumpsit on a written guaranty, to which one defendant pleaded, that, while the guarant}- was in the plaintiff's hands, it was, without the defendant's consent or knowledge [b}' some person or persons to the defendant then and now unknown], 2 materially altered by the addition of two seals opposite the names of the defendant and the other party to it, whereby its apparent nature and effect were wholly altered. Issue being taken on this plea, the jury found it was so altered ; and judgment has been given by the Court of Exchequer for the defendant, after having dis- charged a rule for judgment non obstante veredicto, upon argument. After much doubt, we think the judgment right. The strictness of the rule on this subject, as laid down in Pigot's Case, 3 can only be explained on the principle that a party who has the custody of an instrument made for his benefit, is bound to preserve it in its original state. It is highly important for preserving the purity of legal instru- ments that this principle should be borne in mind, and the rule adhered to. The party who may suffer has no right to complain, since there cannot be any alteration except through fraud, or laches on his part. To say that Pigot's Case 3 has been overruled, is a mistake ; on the contrary, it has been extended : the authorities establishing, as common sense requires, that the alteration of an unsealed paper will vitiate it. Upon the doubt whether this instrument is altered, because it remains exactly as it was when signed, but only something is added near to the signa- tures of the defendants, we may observe, that that addition gives a dif- ferent legal character to the writing, and would, if made with the consent of all interested, completely change the nature of the relation towards each other of the parties to it, and the remedies upon it. The observa- tion that a deed is not made by sealing, but by delivery, does not appear to touch the argument, for no addition, erasure, or interlineation, after execution, makes the actual instrument different in legal effect from what it was ; the original document may be perfectly visible through the attempt to disguise it, but a different appearance is produced. The truth cannot be known from inspection, but would require to be estab- 1 Only the opinion of the Court is given. — Ed. 2 The bracketed clause is taken from the plea. 11 M. & W. 780. — Ed. 3 11 Coke, 27. 244 WOOD V. STEELE. [CHAP. II. lished by evidence, and this through some default of the person to whose care it was consigned, and who would be possessed of a superior legal remedy if the altered writing could be imposed on the contractor as genuine. We are therefore of opinion, both upon principle and authority, that this judgment must be affirmed. Judgment affirmed. WOOD v. STEELE. In the Supreme Court, United States, December, 1867. [Reported in 6 Wallace, 80.] Error to the Circuit Court for the District of Minnesota. Mr. Justice Swayne delivered the opinion of the Court. The action was brought by the plaintiff in error upon a promissory note, made by Steele and Newson, bearing date October 11th, 1858, for $3,720, payable to their own order one year from date, with interest at the rate of two per cent per month, and indorsed by them to Wood, the plaintiff. Upon the trial it appeared that Newson applied to Allis, the agent of Wood, for a loan of money upon the note of himself and Steele. Wood assented, and Newson was to procure the note. Wood left the money with Allis, to be paid over when the note was produced. The note was afterwards delivered by Newson, and the money paid to him. Steele received no part of it. At that time, it appeared on the face of the note that "September" had been stricken out and "October 11th" substituted as the date. This was done after Steele had signed the note and without his knowledge or consent. These circumstances were unknown to Wood and to Allis. Steele was the surety of Newson. It does not appear that there was any controversy about the facts. The argument being closed, the Court instructed the jury, "that if the said alteration was made after the note was signed by the defendant, Steele, and by him delivered to the other maker, Newson, Steele was discharged from all liability on said note." The plaintiff excepted. The jury found for the defendant, and the plaintiff prose- cuted this writ of error to reverse the judgment. Instructions were asked by the plaintiff's counsel, which were refused by the Court. One was given with a modification. Exceptions were duly taken, but it is deemed unnecessary particularly to advert to them. The views of the Court as expressed to the jury covered the entire ground of the contro- versy between the pai'ties. The state of the case, as presented, relieves us from the necessity of considering the questions, — upon whom rested the burden of proof, the nature of the presumption arising from the alteration apparent on the face of the paper, and whether the insertion of a day in a blank left after the month, exonerates the maker who has not assented to it. SECT. IX.j WOOD V. STEELE. 245 Was the instruction given correct ? It was a rule of the common law as far back as the reign of Edward III. that a rasure in a deed avoids it. 1 The effect of alterations in deeds was considered in Pigot's Case, 2 and most of the authorities upon the subject down to that time were referred to. In Master v. Miller, 3 the subject was elaborately examined with reference to commercial paper. It was held that the established rules apply to that class of securities as well as to deeds. It is now settled, in both English and American jurisprudence, that a material alteration in any commercial paper, without the consent of the party sought to be charged, ex- tinguishes his liabilit}'. The materiality of the alteration is to be decided by the Court. The question of fact is for the juiy. The altera- tion of the date, whether it hasten or delay the time of payment, has been uniformly held to be material. The fact in this case that the alteration was made before the note passed from the hands of Newson, cannot affect the result. He had no authority to change the date. The grounds of the discharge in such cases are obvious. The agree- ment is no longer the one into which the defendant entered. Its identity is changed : another is substituted without his consent, and by a party who had no authority to consent for him. There is no longer the necessary concurrence of minds. If the instrument be under seal, he may well plead that it is not his deed ; and if it be not under seal, that he did not so promise. In either case, the issue must necessarily be found for him. To prevent and punish such tampering, the law does not permit the plaintiff to fall back upon the contract as it was originally. In pursuance of a stern but wise policy, it annuls the instrument, as to the party sought to be wronged. The rules, that where one of two innocent persons must suffer, he who has put it in the power of another to do the wrong must bear the loss, and that the holder of commercial paper taken in good faith and in the ordinary course of business is unaffected by anj- latent infirmi- ties of the security, have no application in this class of cases. The defendant could no more have prevented the alteration than he could have prevented a complete fabrication ; and he had as little reason to- anticipate one as the other. The law regards the security, after it is altered, as an entire forgery with respect to the parties who have net consented, and, so far as they are concerned, deals with it accordingly. 4 The instruction was correct, and the Judgment is affirmed} 1 Brooke's Abridgment, Faits, pi. 11. 2 11 Coke, 27. 3 4 Term, 320; 1 Smith's Leading Cases, 1141. 4 Goodman ». Eastman, 4 New Hampshire, 456; Waterman v. Vose, 43 Maine, 504; Outhwaite v. Lnntley, 4 Campbell, 180; Bank of the United States v. Boone, 3 Yates, 391 ; Mitchell v. Ringgold, 3 Harris & Johnson, 159; Stephens v. Graham, 7 Sergeant & Rawle, 509; Miller v. Gilleland, 19 Pennsylvania State, 119 ; Heffner v. Wenrich, 32 id. 423 ; Stout v. Cloud, 5 Little, 207 ; Lisle v. Rogers, 18 B. Monroe, 529. 6 Miller v. Stewart, 9 Wheat. 680 ; State v. Churchill, 48 Ark. 426 : People v. Kneeland, 31 Cal. 288 ; Pelton v. San Jacinto Co., 1 13 Cal. 21 ; Hill v. O'Neill (Georgia,. 246 WOOD V. STEELE. [CHAP. II. 1897), 28 S. E. R. 996 ; Mulky v. Long (Idaho, 1897), 47 P. R. 949 ; Henry v. Coats, 17 Ind. 161 ; Johnston v. May, 76 Ind. 293 (amount payable diminished) ; Stayner v. Joice, 82 Ind. 35 ; Weir Plow Co. v. Walmesley, 110 Ind. 242 (compare Huff v. Cole, 45 Ind. 300) ; Marsh v. Griffin, 42 Iowa, 403 ; State v. Craig, 58 Iowa, 238 ; Bank v. McChord, 4 Dana, 191 ; Blakey v. Johnson, 13 Bush, 197; Warren v. Pant, 79 Ky. 1 ; Waterman v. Vose, 43 Me. 504 ; Fay v. Smith, 1 All. 477 ; Draper v. Wood, 112 Mass. 315; Bradley v. Mann, 37 Mich. 1; Haskell o. Champion, 30 Mo. 136; Britton v. Dierker, 46 Mo. 591 ; Robinson v. Berryman, 22 Mo. Ap. 509 ; Goodman v. Eastman, 4 N. H. 455 ; McGrath v. Clark, 56 N. Y. 34 ; Jones v. Bangs, 40 Ohio St. 139 ; New- man v. King, 54 Ohio St. 273. A fortiori an alteration of the contractual document by the creditor alone, or by the principal debtor with the concurrence of the creditor, releases the surety. Gard- ner v. Walsh, 5 E. & B. 83 (overruling Catton v. Simpson, 8 A. & E. 136 ; but see Mersman v. Werges, 112 U. S. 139, 142) ; Martin v. Thomas, 24 How. 315 ; U. S. Co. v. West Va. Co., 81 F. R. 993; Glover v. Robbins, 49 Ala. 219; Hanson v. Crowley, 41 Ga. 303; Newland v. Harrington, 24 111. 206; Pahlman v. Taylor, 75 111. 629; Wyman v. Yeomans, 84 111. 403; Bowers v. Briggs, 20 Ind. 139; Crandall v. First Bank, 61 Ind. 349 (semble) ; Hart v. Clouser, 30 Ind. 210; State v. Blair, 32 Ind. 313; Franklin Co. v. Courtney, 60 Ind. 134 ; Eckert v. Louis, 84 Ind. 99 ; Hall v. McHenry, 19 Iowa, 521 ; Hamilton v. Hooper, 46 Iowa, 515; Robinson v. Reed, 46 Iowa, 219; Berryman v. Manker, 56 Iowa, 150; Bell v. Mahin, 69 Iowa, 408; Lockuane v. Emer- son, 11 Bush, 69; Bracken Co. e. Daum, 80 Ky. 388; Jackson v. Cooper (Kentucky, 1897), 39 S. W. R. 39; Wilde v. Armsby, 6 Cush. 314; People v. Brown, 2 Doug. (Mich.) 9; Bolton v. Fitz, 88 Mich. 354; State v. McGonigle, 101 Mo. 353; State v. Findley, 101 Mo. 368; Warden v. Ryan, 37 Mo. Ap. 466 ; Haines v. Dennett, 11 N. H. 180; Chappell v. Spencer, 23 Barb. 584; Dewey v. Reed, 40 Barb. 16; McVean v. Scott, 46 Barb. 379; Church v. Howard, 17 Hun, 5 ; Boalt v. Brown, 13 Ohio St. 364; Patterson v. MeNeely, 16 Ohio St. 348; Wallace v. Jewell, 21 Ohio St. 163 ; Harsh v. Klepper, 28 Ohio St. 200; Thompson v. Massie, 41 Ohio St. 307 ; Miller v. Gilleland, 19 Pa. 119; Neff v. Horner, 63 Pa. 327; Fulmer v. Seitz, 68 Pa. 237; Hartley v. Corboy, 150 Pa. 23 ; Bogarth v. Breedlove, 39 Tex. 561 ; Davis v. State, 5 Tex. Ap. 48 ; Wegner v. State, 28 Tex. Ap. 419 ; Eyre v. Hollier, LI. & G. 250, Accord. Immaterial Alteration. The creditor's right against a surety is not affected by an immaterial alteration. Gardner v. Harback, 21 111. 129 ; Kline v. Raymond, 70 Ind. 271 ; Hunt v. Adams, 6 Mass. 519 ; Bullock v. Taylor, 39 Mich. 137 ; Manufactur- ers' Bank v. Follett, 11 R. I. 92. See also 1 Ames, Cases on Bills and Notes, 449. Alteration by a Stranger or by Accident. In the United States, if an in- strument is once effectually delivered to the creditor, its subsequent alteration by some third person will not release the surety. Anderson v. Bellenger, 87 Ala. 334 ; State v. Berg, 50 Ind. 496; Brooks v. Allen, 62 Ind. 401 ; Murray v. Graham, 29 Iowa, 520; Medlin v. Piatt Co., 8 Mo. 235 ; Brown v. Weatherby, 71 Mo. 152 ; State v. McGonigle, 101 Mo. 353 (semble) ; Rhoads v. Frederick, 8 Watts, 448 ; Hill v. Calvert, 1 Rich. Eq. 56 ; Harrison v. Turbeville, 2 Humph. 242. See also 1 Ames, Cases on Bills and Notes, 449. Innocent Alteration by the Holder. It is also generally held in this coun- try that a material alteration by the holder of a bill or note, if made without fraudu- lent intention, will not bar the right to recover upon the instrument as if unaltered. 1 Ames, Cases on Bills and Notes, 449 ; Croswell v. Labree, 81 Me. 44. But see contra, Tormer v. Rutland, 57 Ala. 379 ; Newman v. King, 54 Ohio, 273 ; Taylor v. Taylor, 12 Lea, 714. Ratification or Waiver. A promise by a surety to pay an altered obligation is not a waiver of the defence of alteration. Warren v. Fant, 79 Ky. 1. But see Knoebel v. Kiucher, 33 111. 308 ; Bell v. Mahin, 69 Iowa, 408. — Ed. SECT IX.] ELLESMERE BREWERY COMPANY V. COOPER. 247 ELLESMERE BREWERY COMPANY v. COOPER and Others. In the Queen's Bench Division, December 5, 1895. [Reported in Law Reports, 1896, 1 Queen's Bench Division, 75.] Lord Russell, of Killowen, C. J. 1 This was an action against Cooper and four other defendants who had signed a bond as sureties for Cooper. At the trial before the learned county court judge, judg- ment was given for the plaintiffs as against Cooper, and judgment was given for the four remaining defendants as sureties. The facts were that Cooper, having become agent and traveller for the plaintiffs, was called upon to give them some security. He accord- ingly gave the bond in question, in which he was joined by the four other defendants. The bond was dated April 30, 1894. Bv its terms the five defend- ants were jointly and severally bound to the plaintiffs in the sum of £150. It then recited that Cooper had been appointed agent for the company, and stated the condition of the bond to be that, if Cooper duly accounted for all moneys received by him for the plaintiffs, and otherwise performed the duties of his agency, the bond should be void. It then provided that the liability of Nunnerley and Emberton (two of the defendants) should be limited to £50 each, and that of Pay and Bromfield (two other of the defendants) to £25 each. The effect, therefore, of the bond, as drawn, was that the principal and the sure- ties were jointby and severally bound in the sum of £150, but that liability could not be enforced against any of the sureties beyond the limit of the sum specified as to each of them. Nunnerley was the last to sign, and his signature thus appears on the bond: " Walter Nun- nerley, twenty-five pounds only." The witness to the execution of each of the signatures was Mr. Bruce, the plaintiffs' manager, who, so far as appears, took the bond without making any objection to the manner of Nunnerley's execution ; nor was it suggested that Nun- nerly had surreptitiously added the qualification of "twenty-five pounds only" to his signature. As no evidence was given on the point, it cannot be assumed that Nunnerley in bad faith sought by the form of his execution of the bond to limit any liability he had previously agreed to undertake. The probability is that in giving particulars of his sureties Cooper had erroneously stated that Nunnerley had agreed to undertake liability to the extent of £50, whereas he had done so only to the extent of £25. Subsequently Cooper, the principal, received moneys of the plaintiffs to the amount of £48, for which he had failed to account ; and judgment was given against him at the trial for that amount. The contested question was the liability of the other defend- ants, the sureties. The learned count}- court judge held that no one of 1 Only the opinion of the court is given. — Ed. 248 ELLESMERE BREWERY COMPANY V. COOPER. [CHAP. IL them was liable, and gave judgment for them accordingly. The pres- ent appeal is against that judgment. It was argued for the plaintiffs (1) that the form of Nunnerley's exe- cution did not constitute an alteration of the bond so as to discharge from liability the three prior executing sureties; (2) that, if an alter- ation, it was not a material alteration, and therefore did not discharge such sureties ; and, lastly, (3) that in any case Nunnerley was liable to the extent of £50, or if not of £50, at least to the extent of £25. In my judgment, no one of these contentions is well founded. I think the effect of Nunnerley's mode of execution, on the facts of this case, is substantially the same as if the proviso in the body of the bond had been altered by him before execution i:y him b}' striking out £50 and inserting instead £25. It was, therefore, an alteration. Its effect I shall presently discuss. The argument of the learned counsel for the appellant was, that the loss in question was to be divided into fourths, and that so long as each fourth did not exceed the sum for which each surety had become liable, each of them was bound to pay, and without any right to contribution from his co-sureties, whether the fixed limit of his liability was for the greater or the smaller amount. Here it was said the one-fourth of the loss was £12, and as Nunnerley had clearly intended to make himself liable, as also had Pay and Bromfield, for £25 each, it was immaterial whether Nunnerlej 7 signed for £25 or £50. Each, it was contended, was bound to pay £12 ; and Emberton was bound to bear no more of the loss than the others. In m}' judgment, this contention is founded on a misapprehension of the law. It renders it necessary to consider the principle upon which liability of sureties inter se rests. That principle is, that sureties for the same principal and for the same engagement, even although bound hy different instruments and for different amounts, have a common interest and a common burthen ; so that if one surety who is directly liable to the creditor pays such creditor, he can claim contribution from his co-sureties whose obligation to the creditor he has discharged. But how is the amount of the claim to be determined? According to the argument of the learned counsel for the plaintiffs, it is to be determined b}' the number of the sureties. Thus, if there are four sureties and one of them pa}'s all, he can recover one-fourth, and one-fourth only, of his payment from each of the other three co sureties. But this is not in all cases true, even where each of the sureties has made himself liable for the same amount. Thus, where four sureties are jointly and severally bound in a surety bond, and one of them pays the amount of the bond, but one of the remaining three sureties is insolvent, the right to contri- bution against the two other sureties is for thirds, not for fourths, of the sum paid. But how is the amount to be determined, where, although the sureties are jointly and severally bound, there are different limits of liability, as in this case? It is clear that where the full amount of the bond is due and payable to the creditor, that liability can only be en- SECT. IX.] ELLESMEEE BREWERY COMPANY V. COOPER. 249 forced against each surety to the limit of the liability fixed In the instru- ment. In such ease there would be no riglit of contribution, for each would have paid to the limit of his liability. But suppose only half the amount of the bond is due and payable to the creditor, and such amount is paid by one only of the sureties, who has fixed the limit of his liabil- ity at one-half the amount of his bond. Could it be said that he had no right to any contribution from his co-sureties? Surely not. The burthen is a common burthen of all, but unequally distributed. By his payment of the loss of one-half the surety has discharged a liability which might have been enforced against the other sureties up to the fixed limit. It would be against all equitable principles that in such a case the other sureties should go free because it happened that the creditor had enforced payment against one only. Again, it is clear that one surety cannot keep for his own sole benefit a security for his surety- ship where he is bound with other sureties for the same principal and the same engagement. Suppose, then, that one surety, whose limit of liability was £1,000, has realized £1,000 from such security, being bound with three other sureties with a limit of liability of £2,000 each, making in all £7,000. It is clear that that £1,000 must be taken into account for the benefit of all such sureties inter se. But upon what principle? Sureby upon the only principle which will secure its equitable division, namely, proportional distribution. Thus the surety for £1,000 would benefit to the extent of one-seventh, and each of the others to the ex- tent of two-sevenths each. The same principle must apply where the burthen has to be distributed. Where the claim of the creditor is to the full amount, each must pay up to the fixed limit of his liability ; but where the claim is less than such full amount, and is discharged by one, the claim must be proportionately borne by the others, even where the claim does not exceed the fixed limit of the liability of the surety who has paid. What I have so far said is, I think, to be gathered from the princi- ples laid down in Dering v. Winchelsea ; l but in Pendlebury ''. Walker, 3 Alderson, B., expressly states the rule thus : "Where the same default of the principal renders all the co-sureties responsible, all are to con- tribute ; and then the law superadds that which is not only the princi- ple, but the equitable mode of applying the principle, that they should all contribute equally if each is a surety to an equal amount ; and if not equall}', then proportionally to the amount for which each is a surety." In Steel v. Dixon, 3 Fry, J., cites with approval the language I have quoted ; and", later, Pearson, J., in In re Arcedeckne, 4 adopts the lan- guage of Fit, J. (See also Ellis v. Emmanuel 5 and Evans v. Bremridge. 6 ) Apply this principle to the present case. I assume the bond to have been executed according to its original tenor without qualification or alteration. The total loss being £48, Emberton, having subscribed for 1 1 Cox, 318. 2 4 Y. & C. (Exch.) 424. 3 17 Ch. D. 825, at p. 830 * 24 Ch. T). 709, at p. 714- 5 1 Ex. D. 157. 6 2 K. & J. 174. 250 ELLESMERE BREWERY COMPANY V. COOPER. [CHAP. II. £50 out of the total of £150, would be liable for one-third ; and if he paid no more he would have no claim for contribution ; if he paid to the plaintiff more than one-third, he could claim contribution from his co-sureties in the proportion of their subscription. Stated as a sum in proportion, Emberton's liability would be arrived at thus : As 150 is to 50, so is 48 to the result. So worked out, Emberton would be liable for £16 only, and if he paid more would have a claim for contribution. In like manner Pay and Bromfield would be liable for £8 each, and Nunnerley for £16. Now, to appreciate the materiality of the altera- tion, let us consider its effect upon the liability of Nunnerley. He explicitly says, "I execute the bond only on the terms of my liability being limited to £25." He could not, therefore, in any case be made liable for more. Whether he can be made liable even for the £25 I shall presently consider. What, then, is the effect of the altered limi- tation to £25 by Nunnerley upon the position of the other three sure- ties? Take Emberton's position. For simplicity, assume that the total liability to the plaintiff company for £48 has been paid by Emberton. According to the tenor of the bond without the alteration, Emberton would have to bear two-sixths — equal to one-third of the loss; Nun- nerley two-sixths — equal to one-third ; and Pay and Bromfield one- sixth each. But by the alteration it is manifest that Emberton, who has paid, would not have the same right of contribution against Nun- nerley, and if Nunnerley is not bound at all, would have no right of contribution against him. The alteration was then clearly material. It is unnecessary to give similar illustrations as to Pa}* and Bromfield. The result, therefore, is that neither Emberton, Pa}', nor Bromfield can be made liable on this bond. Each of them is entitled to say, " The contract into which I entered was on 'the basis of Nunnerley being a party to it with a liability of £50. That is not the contract as it now appears from the bond, and I am, therefore, not bound by it." Their position would be still stronger if Nunnerley is not bound by the bond at all. The remaining question then is, Is Nunnerley bound at all? I have already intimated, that as he has expressly said, "I shall be liable only for £25," he cannot be made liable for the £50 ; but is he liable even for the £25 ? I think he is not. He, in good faith, expressly limits his liability to £25 ; but he undertakes that liability, not as a separate or independent liability, but as part of a contract in which three other sureties are joining him, against whom in certain eventuali- ties he will have rights of i*ecourse, between whom and himself a com- mon burthen is to be borne, although unequally distributed.' But if in fact such sureties are not bound by the contract (and we have adjudged that the}' are not), Nunnerley is entitled to say, "This is not the con- tract into which I have entered, and I am not bound by it." The judgment of the learned county court judge must stand, and the appeal will therefore be dismissed with costs. Appeal dismissed. 1 1 The erasure by the creditor of the name of one surety discharges the co-sureties on the same obligation. Nicholson v. Revill, 4 A. & E. 675; Mitchell v. Burton, 2 Head, 613. But see Collins v, Prosser, 1 B. & C. 682. — Ed. SECT. IX.] WHITCHEK V. HALL. 251 WHITCHER v. JAMES HALL. In the King's Bench, Hilary Term, 1826. [Reported in 5 Barnewalt. Sf Cresswell, 269.] Bayley, J. 1 I think that the rule for entering a nonsuit ought to be made absolute. Bv the agreement which is set out in the declaration, the plaintiff agreed to let, and Joseph Hall agreed to take, the milking of thirty cows (not more nor less) for the sum of £7 10.s\ per cow per annum, to commence on the 14th of February, 1824, and on the condi- tions therein mentioned. The agreement was, that Joseph Hall was to have the milking of thirty cows, and the benefit was to inure to Joseph, not to James, but the latter stipulated that he would pay the whole rent. One question is, whether that is an entire contract as to the number of cows. If it be, Joseph was entitled to have the milking of thirty cows during the continuance of the term. If it was not an entire contract, but a contract to pay for so man}- cows as the plaintiff should supply, and the plaintiff supplied twentj'-nine or any other number, he would be entitled to payment for so man}'. I am of opinion that this was an entire contract for the purchase of thirty cows ; and if at the commence- ment of the term the plaintiff could not insist that this was a divisible contract, it must follow that it continued an entire contract during the term. I do not enter into the question whether there was a perform- ance of the contract at the commencement of the term. It is sufficient to say that there was a new agreement, without the knowledge of James ; that Joseph was to have the milking of twenty-eight cows during one part of the year, and thirty-two during the other part. That, as it seems to me, was not a continuance of the original bargain, which was for the milking of thirty cows, but a new agreement. The new agree- ment was binding onby on those persons who were parties to it. If it had been intended to bind James by it, he should have been consulted ; he had a right to insist upon a literal performance of the original bar- gain. If a new bargain was made, he had a right to exercise his judg- ment whether he would become a party to it. 2 There ma}*, perhaps, be very little difference between the two contracts, but the question does not turn on the amount of the difference ; but the question is, whether the contract performed by the plaintiff is the original contract to which the defendant was a party. If it is, then James is bound by it ; other- wise he is not. There is no hardship upon the plaintiff, for he knew that James stipulated to pay the rent upon his, the plaintiffs, fulfilling the terms of the original bargain, and that he, James, was not bound to consent to the substitution of a new contract. In Heard v. Wadham 3 1 Only the opinion of Batlet, J., is given. Holroyd, J., concurred, but Little- pale, J., dissented. — Ed. 2 If the surety assents to the new contract his liability continues. — Ed. 3 1 East, 619." 252 SANDERSON V. ASTON. [CHAP. IL and Campbell v. French x it was held that the performance of a contract, substantially the same as that originally made, did not give a right of action against a surety who had not consented to the alteration. Here the plaintiff attempts to maintain his action by proving the per- formance not of the contract declared on, but of a subsequent agree- ment. But he has averred, and was bound to prove performance of the original agreement. That he has not proved ; and, upon that ground, I am of opinion that he was not entitled to recover, and that the rule for entering a nonsuit ought to be made absolute. 2 SANDERSON v. ASTON. In the Exchequer, January 20, 1873. [Reported in Law Reports, 8 Exchequer, 73.] Declaration on a bond given by the defendant to the plaintiff, the condition of which recited that, by an agreement of even date, the plaintiff had agreed to admit into his service, as clerk and traveller, one John Thomas Johnson, upon Johnson's obtaining two sureties " for his duly and faithfully accounting to the plaintiff, his executors, &c, and other the person or persons who should or might become partner or partners with the plaintiff in his business of a lead, glass, and color merchant, in manner thereinafter mentioned, and for his faithful and honest conduct during the time of his continuance in the said service ; " the condition of defeasance being that Johnson should from time to time, and at all times, well and satisfactorily account for, and pay over and deliver to the plaintiff all and eveiy sum and sums of mone}*, &c. T which he should receive for the use of the plaintiff, or the plaintiff and any person who might become his partner ; and the breach alleged being, that Johnson did not well and satisfactorily account for, or pay over, or deliver to the plaintiff, or to the plaintiff and his partner, cer- tain sums of money (amounting to £84 9s.) received by him for the use of the plaintiff and his partner during his service with them. i 2 H. Black. 163 ; 6 T. R. 200. 2 Woodcock v. Oxford, 1 Drew. 521; Northwestern Co. v. Whinray, 10 Ex. 77 ; U. S. v. Tillotson, 1 Paine C. C. 305 ; St. Louis Co. v. Hayes, 71 Fed. Rep. 110; Parke v. White River Co., 110 Cal. 658 (real surety) ; Rowan v. Sharps Co., 33 Conn. 1 (real surety) ; Chester v. Leonard, 68 Conn. 495 ; Bethune v. Dozier, 10 Ga. 235 ; Zimmerman v. Judah, 13 Ind. 286, 22 Ind. 388; Peru Co. v. Ward (Kansas Appeals, 1895), 41 Pac. R. 64, 51 Pac. R. 805 ; Plunkett v. Davis Co., 84 Md. 529 ; Erickson v. Brandt, 53 Minn. 10 ; Prior v. Kiso, 81 Mo. 241 ; Beers v. Wolf, 116 Mo. 179 ; Evans r. Graden, 125 Mo. 72 ; Bnrley v. Hitt, 54 Mo. Ap. 272 ; Consaul v. Sheldou, 35 Neb. 247 ; Watriss v. Pierce, 32 N. H. 560 ; Bangs v. Strong, 7 Hill, 250, 4 N. Y. 315 ; Farmers' Bank v. Evans, 4 Barb. 487 ; Eneas v. Hoops, 42 N. Y. Sup'r Ct. 517 ; Cornell v. Eagan, 13 Daly, 505; Northern Co. v. Kennedy (North Dakota, 1897), 73 N. W. R. 524 ; Lane v. Scott, 57 Tex. 367 ; Gard- ner v. Watson, 76 Tex. 25; Sage v. Strong, 40 Wis. 575 (modification of judgment); Nichols v. Palmer, 48 Wis. 110; Titns v. Durkee, 12 Up. Can. C. P. 367, Accord. — Ed. SECT. IX.] SANDEKSON V. ASTON. 253 Pleas : 2. On equitable grounds, that it was one of the terms of tho agreement in the said condition mentioned, that the agreement should be terminated by one month's notice on either side ; and that, after- wards, the plaintiff and Johnson, without the knowledge, privity, or consent of the defendant, altered the agreement and made it terminable by three months' notice on either side, and thereby materially increased the risk of the defendant as surety, and that the defaults alleged were committed by Johnson after the alteration. 3. On equitable grounds, that Johnson, before the commission of the said defaults, had committed during the said service divers other defaults of the same kind ; and that the plaintiff, though well knowing the said last-mentioned defaults, wholly omitted and neglected to inform the defendant thereof, and, notwithstanding the said last-mentioned defaults, continued to employ and retained Johnson in the said service ; and that the defaults alleged were committed by Johnson during the said continuance and retention of him by the plaintiff in the said service. Demurrers and joinder. JR. G. Williams, for the plaintiff. 1 .Leioers, for the defendant, was directed to confine himself to the second plea. The second plea is good. If the agreement between the plaintiff and Johnson was altered in any respect, it became a new and different agreement, and the surety is discharged ; or, rather, it becomes an agreement which the surety had never guaranteed. Tayleur v. Wildin. 2 But, further, the alteration was a material one ; it took away from the surety the security which would be afforded to the employer (and therefore to himself) by the power of dismissing a clerk on a short notice. Kelly, C. B. I am of opinion that there is nothing in the matters alleged in the second plea to discharge the surety. The authorities cited go to show that we are to look at the terms of the surety's engage- ment ; not at the terms of any agreement between the empkyer and employed, unless these terms are made part of the surety's agreement, or unless something has been done, which, with reference to those terms, substantially alters his position. Now the plea alleges that it was a term of the contract between the employer and employed that the service should be terminable by one month's notice, and that after- wards, and before the defaults in respect of which the action is brought, they varied the contract by providing that the service should only be terminable by a three months' notice on either side. And if it clearly appeared that the surety had entered into the agreement on the faith of the original contract, that is, if notice had been given to him of the terms of the contract, and he had, after that notice, entered into this bond, he would undoubtedl}' have been discharged by the alteration. The case of North Western Ry. Co. v. Whinray 3 shows that if the 1 The argument for plaintiff is omitted. — Ed. - Law Rep 3 Ex. 303 • 10 Ex. 77; 23 L. J. (Ex.) 261. J54 SANDERSON V. ASTON. [CHAP. II. agreement between the employer and employed had been made the basis of the surety's contract, and if for that original agreement another had been substituted determinable on a different event, that which was the basis of the surety's contract would be gone, and the suret}' would be discharged. But it does not appear that the surety ever had notice of that agreement, further than that the plaintiff had agreed to employ Johnson as traveller upon his obtaining two sureties for his u duly and faithfully accounting," and for his " faithful and honest conduct." But the third plea raises a different question. The case of Phillips v. Foxall 1 clearly shows that, if any defaults or breaches of duty, whether by dishonesty or not, have been committed by the employed against the employer, under such circumstances that the employer might have dis- missed the employed, the surety is entitled to call on the employer to dismiss him. The question therefore is, whether the allegation of the plea shows such breaches of duty as would have entitled the plaintiff to dismiss Johnson, and would, therefore, have entitled the surety to call upon him to do so. It is said that no dishonesty is shown b} r the plea. That may well be ; and 3 T et the employed by failing to pay over money which he has received may commit a breach of his duty, which would entitle his employer to dismiss him. Now we must take it on the plea, reading it with the declaration, that Johnson had received for the plain- tiff certain sums of money which it was his duty to pa} 7 over, and which he did not pay over, and the question is, whether that is not prima facie a breach of duty which would entitle the plaintiff to dismiss him. I am of opinion that it is, and that it is sufficient if the plea raises such a prima facie case. Martin, B. I think the third plea is good on the authority of Phillips v. Foxall. 2 It is my impression that the second plea is good also ; for I think the declaration must be taken as meaning that the defendant was to guar- antee Johnson's fidelity in that service which he entered on with the plaintiff; and I apprehend that, if afterwards the plaintiff and Johnson entered into a new contract which would cast a new liability upon the surety, the surety was discharged. Now, if by the original contract Johnson was liable to be dismissed at one month's notice, and that is afterwards altered into a contract for a three months' notice, that is a material alteration, involving a new liability in the surety, and which, therefore, if entered into without his consent, will discharge him. I do not, however, entertain this opinion so strongly as to induce me to dis- sent from the judgment of the Court. Pigott, B. I think the second plea is no defence. It is pleaded on equitable grounds, and the fact relied on is, that the agreement between Johnson and the plaintiff was made determinable by a three months' notice instead of a one month's notice, without the knowledge or con- sent of the surety, whereby the risk of the surety was materiallj i Law Rep. 7 Q. B. 666. 2 Ibid. SECT. IX.] SANDERSON V. ASTON. 255 increased. I think the averment that the risk was materially increased is a proposition of law, an inference from the previous statement ; we have to see whether that is a proper inference, so as to give the surety a defence in equity, and I am of opinion that it is not. If the creditor agrees to change the terms of his contract with the person on whose behalf the guaranty is given, and does thereby increase the surety's risk without his consent, the surety is discharged. Equally, if the surety chooses to contract on the terms of the original agreement, so as to make that agreement a material part of his contract, he is discharged by the alteration. But if (which appears to be the case here) the change of terms takes place in an agreement which is merely collateral to that of the surety, and is not made a part of it, and if it is also quite immaterial to the risk, it affords the surety no answer. Now, I think this change did not affect the surety's risk at all. If a notice were given for three months, as required by the new agreement, his risk would not extend over the whole three months, but would terminate at the end of the first month. He is therefore no worse off because of the change, and his plea therefore fails. As to the third plea, I agree that it is good, for the reasons already given. Pollock, B. I also agree that the third plea is quite within Phillips v. Foxall. 1 As to the second plea, after what has been said by my Brother Martin, I express my opinion with some diffidence, but I think it is bad. Pleas of this kind are well known at law, and Whitcher v. Hall is a leading case upon the subject. In that case there was an agreement between the plaintiff and Joseph Hall for the letting of the milking of thirty cows, and that agreement was imported into the contract by which James Hall, the defendant, guaranteed to the plaintiff the pay- ment by Joseph Hall of the rent. A change being afterwards made in the number of the cows, the surety was held to be discharged, and ' Bayley, J., says : 2 " The new agreement was binding only on the per- sons who were parties to it. If it had been intended to bind James by it, he should have been consulted ; he had a right to insist upon a literal performance of the original bargain. If a new bargain was made, he had a right to exercise his judgment whether he would become a party to it. There ma}- perhaps be very little difference between the two contracts, but the question does not turn on the amount of the difference ; but the question is whether the contract performed by the plaintiff is the original contract to which the defendant was a party." That case (which was no doubt a very strong decision) has been acted on ever since, when the party who has become surety has taken care that the original agreement should be made part of his contract. But in the cases cited to us, where the original contract was not made part of the surety's contract, but the Court has nevertheless said that the 1 Law Rep. 7 Q. B. 666. 2 5 B. & C, at p. 275. 256 HOLME V. BRUNSKILL, [CHAP. IL suretj' was discharged, there has been some material alteration in the terms of the original agreement, in this sense, that the suret} - has been injured or put in a worse position by the change. It is therefore open to the Court in such cases to consider whether the alteration is a material one or not, and I am of opinion that the alteration in the pres- ent case is not so. The distinction I have adverted to was no doubt in the mind of the pleader when he pleaded this plea on equitable grounds. Judgment for the plaintiff on the demurrer to the 2d plea ; l for the defendant on the demurrer to the 3d plea. HOLME v. BRUNSKILL. In the Coukt of Appeal, June 7, 1877. [Reported in Law Reports, 3 Queen's Bench Division, 495.] Cotton, L. J. 2 This is an appeal of the plaintiff against a judgment of Denman, J., in favor of the defendant, Robert Brunskill. The action was on a bond for £1,000, dated the 18th of March, 1873, executed by George Brunskill, Robert Brunskill, and others in favor of the plaintiff. The plaintiff was at the date of the bond, and still is, the owner of a farm called Riggindale, and before the execution of the bond he had agreed with George Brunskill to let to him as yearly tenant Riggindale Farm, including certain hill pasture held therewith, and also a flock of 700 sheep : and the bond, in which Robert Brunskill joined as surety for George Brunskill, was given to the plaintiff to secure the delivery to him at the end of the tenancy of the flock of sheep in good order and condition. The material part of the condition of the bond is as follows : " If the above bounden G. Brunskill should, at the determination of the tenancy, deliver up to H. P. Holme, along with the said farm and premises, the like number, species, and quality of good and sound sheep as were delivered to the said G. Brunskill as aforesaid ; " and " in case the said stock of sheep should, at the determination of the said tenancy, be reduced or deteriorated in number, quality, or value, should pay to H. P. Holme compensation for such reduction or deterioration, to be ascertained by certain arbitrators " in manner therein provided ; and " should yearly and every year during the tenancy pay, or cause to be paid, to H. P. Holme, by way of rent or interest for the sheep, the sum of £35 by two equal half-yearly payments," then the bond should be void. On the 9th of November, 1875, the plaintiff gave to George Brunskill a notice to quit the farm, which was in terms a notice to quit " on the 10th of April, 1876, or at the expiration of the year of your tenancy, 1 Stewart v. McKean, 10 Ex. 675, Accord. — Ed. 2 Only the opinions of the Court are given. — Ed. SECT. IX.] HOLME V. BRUNSKILL. 257 which shall expire next after the expiration of one half year from the service of the notice." The notice being served less than six months before the 10th of April, 1876, was ineffectual to determine the tenancy on that day, but was effectual to determine it on the 10th of April, 1877. Before the 10th of April, 1876, George Brunskill and the plain- tiff met, and George Brunskill objected to the insufficiency of the notice to quit. Whereupon the plaintiff stated that he did not wish to take the farm from him, but that he wanted part of the farm culled the Bog Field, and it was thereupon agreed that George Brunskill should surrender this on the 10th of April then next, and that his rent should from that time be reduced by £10 a year, and that the notice to quit should be considered as withdrawn. This agreement was carried into effect, and George Brunskill continued to hold the remainder of the farm; but early in October following, the plaintiff gave him due notice to quit on the 10th of April, 1877. Before this time arrived George Brunskill got into difficulties and had become insolvent. His trustee, sometime in March, 1877, gave up the farm, and it was then ascertained that the flock referred to in the bond was reduced in number and deteri- orated in quality and value; and the action has been brought to recover from the defendant, under his bond, compensation for the diminished value of the flock. Mr. Justice Denman, before whom the action was tried, gave judg- ment for the defendant, and against this judgment the plaintiff has appealed. One ground on which the defendant relied in supporting the judg- ment was, that his obligation under the suretyship bond had expired before the deficiency arose, that is to sa} - , that by the notice to quit and agreement made as to the surrender of the Bog Field, and the with- drawal of the notice, a new tenancy was created, to which the bond did not apply ; and for this he relied on the case of Tayleur v. Wildin a as an authority, that under the circumstances a new tenancy was created ; and it was on the authority of Tayleur v. Wildin 1 that Mr. Justice Denman, as we understand, principally relied, but we are unable to agree with this view. In Tayleur v. Wildin l the tenant continued in the occupation of the farm after the day for which the notice to quit, which was withdrawn, had been effectually given, and the rent for which the surety was sued accrued in respect of the occupation after that day, and the Court considered the continuance of the tenant's pos- session after that time as a new tenancy, and that the guaranty, which applied only to the old tenancy, was therefore gone. But in the present case the tenancy of George Brunskill was, in fact, determined on or before the day when, if the notice to quit had not been withdrawn, it would have ended. The deficiency and deterioration of the flock there- fore occurred at the determination of the very tenancy to which the bond referred. It was, however, argued that the effect of giving up 1 Law Rep. 3 Ex. 303. 17 258 HOLME V. BRUNSKILL. [CHAP. II. the Bog Field must be a surrender of the old tenanc} T . But we are of opinion that this cannot be maintained, and that notwithstanding the surrender to a landlord of part of the land demised, the former tenancy of the remainder of the farm still continues. It was contended by the defendant, that even if there was a continu- ance of the old tenancv the effect of the surrender of the Bog Field was to discharge him as surety from all liability. The Bog Field con- tained about seven acres, and the jury, in answer to a question left to them, at the trial, found that the new agreement with the tenant had not made any substantial or material difference in the relation between the parties, as regards the tenant's capacity to do the things mentioned in the condition of the bond, and for the breaches of which the action was brought. The plaintiffs contention was that this must be treated as a finding that the alteration was immaterial, and that, except in the case of an agreement to give time to the principal debtor, a surety waa not discharged by an agreement between the principals made without his assent, unless it materially varied his liability or altered what was in express terms a condition of the contract. In my opinion this contention on behalf of the plaintiff cannot be sustained. No doubt there is a distinction between the cases which have turned on the creditor agreeing to give time to the principal debtor, and the other cases. Where a creditor does bind himself to give time to the principal debtor, he, with an exception hereafter referred to, does deprive the surety of a right which he has, that is to say, of the right at once to pay off the debt which he has guaranteed, and to sue the principal debtor ; and without inquiry whether the surety has, by being deprived of this right, in fact suffered any loss, the Courts have held that he is discharged. The exception to which I have re- ferred is, where the creditor, on making the agreement with the prin- cipal debtor, expressly reserves his right against the suret}' ; but this reservation is held to preserve to the surety the right above referred to, of which he would be otherwise deprived. The cases as to discharge of a surety by an agreement made b}' the creditor, to give time to the principal debtor, are only an exemplification of the rule stated b}" Lord Loughborough in the case of Bees v. Berrington : * "It is the clearest and most evident equit3 r not to cany on any transaction without the knowledge of him [the surety], who must necessarily have a concern in every transaction with the principal debtor. You cannot keep him bound and transact his affairs (for they are as much his as your own) without consulting him. The true rule in my opinion is, that if there is any agreement be- tween the principals with reference to the contract guaranteed, the surety ought to be consulted, and that if he has not consented to the alter- ation, although in cases where it is without inquiry evident that the alteration is unsubstantial, or that it cannot be otherwise than beneficial 1 2 Ves. Jr. 540. SECT. IX.] HOLME V. BRUNSKILL. 259 to the surety, the surety ma}- not be discharged ; yet, that if it is not self-evident that the alteration is unsubstantial, or one which cannot be prejudicial to the surety, the Court will not, in an action against the surety, go into an inquiry as to the effect of the alteration, or allow the question, whether the surety is discharged or not, to be determined by the finding of a jury as to the materiality of the alteration or on the question whether it is to the prejudice of the surety, but will hold that in such a case the surety himself must be the sole judge whether or not he will consent to remain liable notwithstanding the alteration, and that if he has not so consented he will be discharged. This is in acordance with what is stated to be the law by Amphlett, L. J., in the Croydon Gas Company v. Dickenson. 1 The plaintiff, in support of his contention, that having regard to the finding of the jury, the surety was not discharged, relied on various dicta to the effect that an}' material change in the contract between the principals will discharge the surety. Even if by these expressions the judges intended to state that to have the effect of releasing the surety the alteration must be material, it does not follow that they intended to lay down that no alteration would discharge the surety unless the jury, in an action to enforce his liability, held it to be material, or to express any opinion at variance with the rule laid down by me. The case of Sanderson v. Aston was specialty relied on by the plaintiff. But Martin, B., though he did not formally dissent from the decision of the majority of the Court, was not satisfied with the judgment; and if the decision is to be considered as based on the reason given by Pollock, B., that the Court was entitled to consider whether the altera- tion was material, it cannot, in our opinion, be sustained. In the present case, although the Bog Field contained seven acres only, yet it cannot be said to be evident that the surrender of it could not prejudicially affect the surety. Some of the witnesses for the plaintiff admitted that it was occasionally used for pasturing, that its loss would be appreciable in the spring, and that it might make a differ- ence of fifteen in the number of the sheep which the farm would cany. The case ma}' also be considered in another point of view. The bond given by the defendant, the surety, was to guarantee the delivery up of the flock of sheep therein referred to at the determination of the tenancy of the Riggindale Farm, which, in our opinion, must mean Rig- gindale Farm as then demised to George Brunskill, and the bond cer- tainly implied that he should continue to hold the farm as then demised till the flock was given up. The contention of the plaintiff, if it could be supported, would make a variation in this contract, as to the materi- ality of which there is at least a doubt, and would make the defendant liable for a deterioration of the flock during the time when the tenant held a smaller farm than that contemplated by the contract of the surety. The plaintiff's counsel relied on some observations made by Lord 1 2 C. P. D., at p. 51. 260 HOLME V. BRUNSKILL. [CHAP. II. Cottenham in the case of Hollier v. Eyre. 1 But, in fact, those obser- vations are in favor of the defendant and not of the plaintiff. What Lord Cottenham says is, "The surety will be left to judge for himself between his original undertaking and another substituted for it, but that is not the case where the contract remains the same, though part of the subject-matter is withdrawn from its operation." In this case, as already pointed out, the original contract of the surety was that the flock should be delivered up in good condition, together with the farm, as then demised to the tenant. No part of that which was guaranteed was ever withdrawn from the operation of the bond. But the plaintiff attempts to substitute for the contract that the flock should be given up in good condition, with the farm, as then demised, a contract that it should be delivered up in like condition with a farm of different extent. In my opinion the surety ought to have been asked to decide whether he would assent to the variation. He never did so assent, and in my opinion was discharged from liability, notwithstanding the finding of the jury, inasmuch as in m}' opinion the question was not one which ought to have been submitted to them. Lord Justice Thesiger concurs in this judgment. Brett, L. J. I speak with great deference when I say I cannot bring nry mind altogether to agree with this judgment, and I feel bound to observe that I arrive at another view than that which has been expressed. As to the first part of the judgment I entirely agree. I do not think there was airv new tenancy, and I ground that view on the fact of the finding of the jury, amongst other things, that the alteration was immaterial. It is the latter part of this view with which I cannot agree. In the first place, this case comes before us fettered by certain rules. We are bound to observe that it is a direct appeal from the decision of my Brother Denman, after a trial by jur}- ; we are, therefore, not at liberty to ask whether the question he left was left in proper form. There cannot be a motion here for misdirection, and we are not at liberty to say that the finding of the jury was contraiy to the evi- dence. It is a general rule that we have no right to-.look at the verdict, but accept it according to its ordinary construction. I find the question left to the jury was, whether the new agreement with the tenant, which we are told did not alter the tenancy, made a substantial or material difference in the relation between the parties as to the tenant's capacity to do the things mentioned in the bond, and for breach of which the action was brought. They not only found that, but m} T Brother Den- man says that the matter is far more fit for the consideration of a jury of the county of Cumberland than for a lawyer, and he cannot say that he is dissatisfied with their view. Therefore there is the finding of the jury with the assent of the judge. If it were necessaiy to give an opinion, considering I have not an intimate knowledge of these things, but from what I know of Cumberland farmers, so far from dissenting from the opinion of the jury, I think it is a substantial finding. When i 9 H. L. C. 57. SECT. IX.] CAMBRIDGE SAVINGS BANK V. HYDE. 261 one remembers how many views are taken as to farms in Cumberland, I should be inclined to agree with the jury and say it did not make any material difference. We are bound by that finding, and can act in con- formity with it. Where there is a suretyship bond, and there are some alterations in the contract or relation of the parties under the bond as to guaranteeing its performance, the question is whether the alteration is not material or substantial, and whether the surety is released. I cannot bring my mind to think he is, for the law takes no notice of alterations that are neither material nor specific. The proposition of law as to suretyship to which I assent is this, if there is a material alteration of the relation in a contract, the observance of which is necessary, and if a man makes himself surety by an instrument re- citing the principal relation or contract, in such specific terms as to make the observance of specific terms the condition of his liability, then any alteration which happens is material ; but where the surety makes himself responsible in general terms for the observance of certain relations between parties in a certain contract between two parties, he is not released by an immaterial alteration in that relation or contract. My opinion is in accordance with the finding of the jury, and it will be most dangerous in this particular case to put ourselves in the place of a jury, and because we think seven acres may make a differ- ence, or £10 a year ma} T make a difference, to set aside the finding of the jury, which is that neither one is material or substantial. I think the surety is not released. The doctrine of the release of suretyship is carried far enough, and to the verge of sense, and I shall not be one to carry it any further. Judgment affirmed. CAMBRIDGE SAVINGS BANK v. HYDE and Another. In the Supreme Judicial Court, April 6, 1881. [Reported in 131 Massachusetts Reports, 77.] Morton, J. This is a suit against the executors of one of the sureties upon a promissory note held by the plaintiff. By the note, which is dated October 16, 1871, the maker promises to pay to the plaintiff $6,000 on demand, with interest at the rate of seven and one half per cent per annum, payable semi-annually. At the trial, it appeared that the treasurer of the plaintiff, some years after the date of the note, having authority to do so, wrote upon the back of the note the memorandum, " Rate of interest to be 6£ per cent from Oct. 10, 1876." The defendants asked the Court to rule " that any change in the rate of interest of the note, whether made on the face of the note or by a memorandum in the margin or upon the back of the note, was a change in the terms of the contract, and a material alteration of the Oote such as would discharge the defendants' testator, if made without 262 CAMBRIDGE SAVINGS BANK V. HYDE. [CHAP. IL his consent, and that the indorsement upon the back of the note in suit was such an alteration ; " which ruling the Court refused. The defendants contend, in the first place, that this memorandum thus made was a material alteration, in the sense of a mutilation, of the note, which avoided it as to all parties not consenting to it. In the cases where it has been held that a material alteration of a note or other contract avoids it, there has been some change by erasure or interlineation in the paper writing constituting the evidence of the contract, so as to make it another and different instrument, and no longer evidence of the contract which the parties made. The ground Of the decisions is that the identity of the contract is destnyyed. Wade v. Withington ; * Commonwealth v. Emigrant Savings Bank ; 2 Belknap v. National Bank of North America; 3 Hewins v. Cargill. 4 But in the case at bar it is clear that, using the word in this sense, there has been no alteration of the note. The original note remains intact. It is in no respect altered or made different. The memo- randum on the back is evidence of an independent collateral agreement, and has no more effect than if it had been written on a separate paper. Stone v. White. 5 The defendants also contend that, if the memorandum is to be treated as an independent collateral agreement, yet it makes such a change in the terms of the contract as to discbarge the sureties, who did not consent to it. It is clear that, if a creditor makes any agree- ment with the principal debtor, or does any other act which is preju- dicial to the rights of the surety, the surety is discharged from his liability. Thus, if the creditor, bj 7 a valid agreement founded upon a sufficient consideration, extends the time of pa}*ment of the debt, the surety is discharged. The reason is, that such an agreement materially affects the rights of the suret}-, since it prevents him from paving the debt and having an immediate remedy against the princi- pal debtor. Hunt v. Bridgham ; 6 Agricultural Bank v. Bishop. 7 Mr. Justice Story states the rule to be, " that if a creditor does any act injurious to the surety, or inconsistent with his rights ; or if he omits to do any act, when required by the suret} 7 , which his duty enjoins him to do, and the omission proves injurious to the surety ; in all such cases the latter will be discharged." 1 Story, Eq. Jur., § 325. The surety is discharged because the act of the creditor is injurious to him and is inconsistent with the duty which the creditor owes to him. Where the act of which the surety complains is a new agreement changing some of the terms of the original agreement, we think the true rule is, that, if such new agreement is or may be injurious to the surety, or if it amounts to a substitution of the new agreement for the old, so as to discharge and put an end to the latter, the surety is discharged. But if the change in the original contract from its nature is beneficial to the surety, or if it is self-evident that it cannot prejudice 1 1 Allen, 561. 3 100 Mass. 376. 5 8 Gray, 589. 7 6 Gray, 317. 2 98 Mass. 12. * 67 Maine, 554. 6 2 Pick. 581. SECT. IX.] CAMBRIDGE SAVINGS BANK V. HYDE. 263 him, the surety is not discharged. Smith v. United States ; 1 Appleton v. Parker; 2 General Steam Navigation Co. v. Rolt ; 3 Bowmaker v. Moore ; 4 Holme v. Brunskill. In the case at bar, the new agreement was, that, after a day named, the interest on the principal stun lent by the plaintiff should be at the rate of six and a half instead of seven and a half per cent. It was clearly not the intention of the parties to discharge the note and sub- stitute a new contract in its place. The agreement presupposes that the note is to remain in force as a promise to pay the principal debt. The parties did not intend to release the principal debtor or the sureties from their obligation to pay the note, but only to remit a portion of the interest payable under it for the use of the money. We know of no rule of law which requires us to defeat the intention of the parties by holding that this operated to discharge the original contract in whole. It is also clear that the change in the original contract, by reducing the rate of interest, could not be prejudicial to the sureties. It is to be borne in mind that there was no contract by the plaintiff giving time to the principal debtor, and no contract by the debtor that the amount of the note should remain on interest at the new rate for airv time. The plaintiff could at an}- time have sued on the note, and the sureties could at an}' time have paid the note and have had a right to sue their principal at once. The agreement was merely a stipulation to remit a part of the sum which the plaintiff might claim under the note. It did not tie the hands of the creditor, or alter unfavorably the condition of the surety. If there was any consideration for it, so that it had any validit}', it could not operate to the injury of the sureties, any more than an indorsement of, or a receipt for, a part of the principal would. The change made in the terms of the note was necessarily beneficial to all parties bound by it. We are of opinion that the sureties were not discharged, even if they had no knowledge of the change ; and that the ruling of the Superior Court to that effect was correct. Judgment on the verdict for the plaintiff.* M. F. Dickinson, Jr., & H. R. Bailey, for the defendants. G. S. Hale (67. F. Walcott with him), for the plaintiff. l 2 Wall. 219. 2 15 Gray, 173. 3 6 C. B. n. s. 550. 4 7 Price, 223. 5 See Sanford e. Story, 1 5 N. Y. Misc. Rep. 536. Similarly, an agreement by the creditor to accept less than the amount due from the debtor does not discharge the surety. Preston v. Huntington, 67 Mich. 139 ; Ellis v. McCormick, 1 Hilt. 313. But a reduction of the rate of interest, or the amount of the principal by altering the lauguage of the original contract, discharges the surety. Franklin Co. v. Courtney, 60 Ind. 134; /ohnston v. May, 76 Ind. 293. — Ed. 264 KINGSBURY V. WESTFALL. [CHAP. II. B. P. KINGSBURY, Respondent, v. P. R. WESTFALL, Appellant. In the Court of Appeals, New York, January, 1875. [Reported in 61 New York Reports, 356.] Appeal from judgment of the General Term of the Supreme Court in the fourth judicial department, affirming a judgment in favor of plaintiff entered upon a verdict. This action was upon a guaranty. On the 13th of September, 1855, the plaintiff leased to Messrs. Hilliard & Bourne a village lot, with the buildings thereon, situate in the village of Lyons, Wayne County, for the term of five years, commencing on the first day of October then next ; to which lease Alexander B. Williams, the defendant's testator, appended his guaranty, guaranteeing the payment, by the lessees, of the rent reserved therein. On the trial, the plaintiff, after proving that the several quarters' rent commencing with the one falling due April 1, 1858, to and including the quarter falling due April 1, 1860, remained unpaid, rested. The defendant then offered to show that, on the first da\ T of January, 1858, the buildings on said lot, which covered nearly the whole thereof, were destroyed by an accidental fire, and became thereby incapable of occupancy ; and that said premises were not there- after occupied fry or under the lessees, or either of them. The defend- ant also offered to prove that, on the 9th day of April, 18G0, after the expiration of the last quarter's rent sought to be recovered, the plaintiff and the lessees, without the knowledge or consent of the defendant, entered into an agreement, under seal, by which the plaintiff, in con- sideration of the lessees' release to him of the unexpired portion of the terra, released all claim for the rent of the demised premises which should thereafter accrue ; and that the plaintiff did not rebuild the buildings or other buildings in their place ; and that the use of the de- mised premises after the fire was not worth, for the residue of the term, to exceed one dollar per year. These offers being severally objected to as immaterial, were each excluded ; and to the ruling excluding them the defendant duly excepted. The Court directed the jmy to find a verdict for the plaintiff for the amount claimed. The jury ren- dered a verdict as directed. J. Welling, for the appellant. Wm. Clark, for the respondent. 1 Gray, C. The next and only remaining question arises upon the exclusion of the defendant's offer, which, in substance, was, that after the rent sued for had become due, and an action was maintainable for its recovery, the plaintiff, in consideration of an assignment to him of 1 The arguments of counsel are omitted, together with the part of opinion not relating to suretyship. — Ed. SECT. IX.] KINGSBUKY V. WESTFALL. 265 the lessees' unexpired term in the premises, released them from the payment of the rent thereafter to accrue ; and thus, as the defendant insists, so changed the agreement for the payment of rent guaranteed by him, as to discharge him not only from the payment of the rent thereafter to accrue, but from that which was then overdue, and for the recover}* of which this action was brought. It is now too well settled to admit of a doubt, that a guarantor, like a surety, is bound only by u the strict letter or precise terms" of the contract of his principal, whose performance of it he has guaranteed, that he is in this respect '• a favorite of the law," and that a claim against him is strictissimi juris. Wright v. Johnson. 1 If an alteration be made in a contract " in a point so material as in effect to make a new contract," without the consent of a guarantor, he is discharged. Grant v. Smith. 2 And if he be then sued on the original contract a good answer is, "that such contract no longer exists, it having been legall}* terminated b}* the altered or substituted contract made by the parties." The People v. Vilas. 3 These are authoritative statements in varied form, of a conceded cardinal principle, established to save a guarantor from being made liable upon a substituted contract to which he never assented. This just principle is now invoked b}* the defendant and sought to be inter- posed by him as a shield against the plaintiff's right to recover, not upon any portion of the contract upon which a liability was to accrue when the change was made, or upon any portion of it changed b} r the new arrangement, but because, as he says, the parties, the one by re- leasing to the lessor the residue of the term in the demised premises, and the other releasing to the lessees the rent to accrue therefor for the same unexpired term, have, without his consent, changed the contract, the performance of which on the part of the lessees he had guaranteed. It is true the contract was changed, but the obligation which the lessees undertook to perform, so far as it relates to the payment of the rent which had then accrued, was not changed; it remained in the precise terms it was before ; it was, as to the then future, the executory portion of it that was abrogated. It is not pretended that the right of the defendant to be put in pos- session of the vacant lot, for the unexpired term, in the place of the lessees, could, by any possibility, have resulted to his advantage. The case, then, stands in principle as if the plaintiff had, mainly as a charity to the lessees, released them from the hard fate of an acciden- tal fire, changed the contract by releasing them from their obligation any longer to pay rent upon a property that had by accident become nearly worthless to them. This, though it should come within the letter of the rule, would, should it be applied as the defendant insists it should be, do injustice to its spirit. The obligation to pay the rent for which judgment has been recovered has not, in letter or spirit, been 1 8 Wend. 512, 516. 3 35 N. Y. 459, 460. 2 46 N. Y. 93, 96. 266 CALVERT V. THE LONDON DOCK COMPANY. [CHAP. II. changed ; nor is it pretended that any right of the defendant growing out of the contract is, so far as it relates to that obligation, in any re- spect altered or impaired. The judgment appealed from should be affirmed. All concur. Judgment affirmed} CALVERT, Executor, v. THE LONDON DOCK COMPANY. In Chancery, before Lord Langdale, M. R., February 13, 1838. [Reported in 2 Keen, 638.] The following were the circumstances of the case : B\- contract, in writing, dated the 29th day of September, 1829, Robert Streather, a builder, agreed with James Warre, the treasurer of the London Dock Company, on behalf of the company, to perform certain works, which were to be commenced twenty days after notice, and to be completed in twelve months from the commencement. Streather was to provide all materials and labor, in consideration of £52,200, and being allowed to appropriate certain materials mentioned. The engineer of the com- pany was to be the sole judge of the works, and was to emplo} 7 com- petent persons to perform the works, if Streather failed to do so ; and in that case, the costs thereof were to be deducted from the sum to become due to Streather under the contract. A provision was made for varying the price, on any variation being made in the work specified in the contract ; and Mr. Ware, for the compan}^, agreed to pay the £52,200 by instalments, — viz., three-fourths of the cost of the work certified to be done every two months, and the remaining one-fourth after the full completion of the contract. On the 3d of November, 1829, Streather, and Warburton and Lay- cock, as his sureties, executed to James Warre, as treasurer of the company, their joint and several bond for the sum of £5,000, condi- tioned to be void if Streather should well and truly observe, perform, and keep the promises and agreements contained in the contract, which, on the part of Streather, were and ought to be performed, according to the true intent and meaning of the contract. Notice having been given, Streather commenced the works on the 28th of December, 1829, but did not complete them in twelve months, or before the 28th of March, 1831, to which day the time for com- pleting the works was enlarged, with the consent of Warburton and Lay cock. The time having expired, the London Dock Company gave notice to the sureties that they would be called upon to pay the £5,000, under the bond. 1 Kingsbury v. Williams, 53 Barb. 142, Accord Harberton v. Bennett, Beatty, 386 (real surety), Contra. — Ed. BECT. IX.] CALVERT V. THE LONDON POCK COMPANY. 267 On the 13th of April, 1831, Streather quitted the works, and soon afterwards became bankrupt. The company alleged that they had sustained damage to the amount of more than £7,000, by the default of Streather ; and in January, 1835, they caused actions to be brought against the sureties, to recover the full penalty of the bond ; and in the particulars of their demand they stated that they had made payments on account of the contract, to the amount of £49,619 5s. , and in completing the works £18,875 3s. 2<7., making together £68,494 8s. 2d. : that there had become due to Streather, on the contract, £52,200; for varied and increased work, £3,721 16s. Sd. ; and for the implements, engines, and materials he had left, £4,857 3s. 9(7., — making, in all, £60,779 0s. 5(7. / and they represented the dif- ferences as the amount of their loss sustained by the non-performance of the works by Streather. Under these circumstances the plaintiffs filed their bill ; and after alleging that the referee in the action against the company had stated, that although the payments made to Streather amounted to £49,619, the value of the work done by Streather was only £36,429, they charged, that in executing the bond, the sureties considered, and had a right to consider, that the company, until the entire performance of the contract, would have retained in their hands so much of the con- tract price as by the contract the}' were entitled to retain, as a security for the performance of the rest of the contract ; and that by advancing to Streather more than the}* were bound to do, the company deprived the plaintiffs of the benefit of that security, and thereby, in equity, released them from the bond ; or, at least, could not equitably recover against the plaintiffs any loss which the}' might have sustained by making such advances ; and ought not to be permitted to sue the plain- tiffs on the bond, for if they had not made such advances, they would not have sustained any loss by the non-performance of the contract. The common injunction, for want of answer, was obtained. The actions were tried on the 20th of February, 1836. The plaintiffs there obtained a verdict, with only nominal damages. It was now asked that the common injunction which has been granted might be made perpetual, and that the defendants might pay the costs of suit. 1 Mr. Tinney, Mr. Kindersley, and Mr. Roupell, for the plaintiffs. Mr. Pemberton, Mr. Phillimore, Mr. Blunt, for the defendants, insisted that nothing had been done in this case to release the sureties ; that the company had made the extra advances to the contractor, not under the contract, but as loans, which they were entitled to do, and had thereby greatly facilitated the performance of the work. That so far from prejudicing the sureties, the company had diminished their liability ; for, but for these timely advances, the contract would long before have been abandoned, and the bond forfeited. 1 The statement of the case is abridged and the argument for the plaintiffs is mitted. — Ed. 268 CALVEKT V. THE LONDON' DOCK COMPANY. [CHAP. II On the point of costs they said that the plaintiff's remedy was at law ; and it was no justification for the prosecution of this suit, and no rea- son for the interference of this Court, because nominal damages only were recoverable at law. That the costs of the action had been pro- vided for at law, and no costs ought to be given in this suit ; for the point in litigation between the parties having been already decided by the Court of King's Bench, there was no ground for now making any decree. The Master of the Rolls (after stating the case) proceeded : — The defendants do not dispute the fact that their advances to Streather exceeded the sums which the}' were bound to advance under the contract, but they say, that the increased advances were made for the purpose of giving Streather greater facility to perform the con- tract. It is said that the performance of the work by Streather was impeded by his want of funds ; and that by the advances made to him he was enabled to do more than he otherwise could have done, and that to assist him was to assist his sureties ; and it was only for the purposes of affording that assistance that the com pan}' did more than they were obliged to do. The argument, however, that the advances beyond the stipulations of the contract were calculated to be beneficial to the sureties, can be of no avail. In almost every case where the surety has been released, either in consequence of time being given to the principal debtor, or of a compromise being made with him, it has been contended, that what was done was beneficial to the surety, — and the answer has always been, that the surety himself was the proper judge of that, — and that no arrangement, different from that contained in his contract, is to be forced upon him ; and bearing in mind that the surety, if he pays the debt, ought to have the benefit of all the securities possessed by the creditor, the question always is, whether what has been done lessens, that security. In this case, the company were to pay for three-fourths of the work done every two months ; the remaining one-fourth was to remain un- paid for till the whole was completed ; and the effect of this stipulation was, at the same time, to urge Streather to perform the work, and to leave in the hands of the company a fund wherewith to complete the work if he did not ; and thus it materially tended to protect the sureties. What the company did was perhaps calculated to make it easier for Streather to complete the work, if he acted with prudence and good faith ; but it also took away that particular sort of pressure which, by the contract, was intended to be applied to him. And the company, instead of keeping themselves in the situation of debtors, having in their hands one-fourth of the value of the work done, became creditors to a large amount, without any security ; and under the circumstances I think that their situation with respect to Streather was so far altered, that the sureties must be considered to be discharged from their suretyship. SECT. IX.] WATTS V. SHUTTLE WORTH. 269 I think, therefore, that the plaintiffs are entitled to have the injunc- tion made perpetual, and that they are also entitled to the costs of this suit. The plaintiffs appear not to have had a complete legal defence, though they had a case which reduced the damages to a nominal amount. They could not, however, anticipate the result of the action. They had an equitable defence; and, under the circumstances of this case, if an application had been made for the purpose, I do not think that the plaintiff in equity would have been ordered to give judgment ; and, after the verdict with nominal damages, the applica- tion to the Court of King's Bench made by the plaintiffs at law made it important for the defendants there to proceed with their bill in equity. 1 WATTS v. SFIUTTLEWORTH. In the Exchequer, January 31, 1860. In the Exchequer Chamber, June 19, 1861. [Reported in 5 Hurlstone 378 . BECT. X.] LEE V. JONES. 28 •■> and applicable to the guaranty in question. The non-disclosnre of the circumstance of the change of security, even if it had been material, would not have vitiated the guaranty unless it had been fraudulently kept back ; and there was no ground to impute fraud in fact to the plaintiffs or their agents. They might well have supposed that the desire of Mr. J. Brancker to get rid of his own guaranty did not indi- cate any bad opinion of his brother's character or solvency, but arose from a wish on other grounds to contract his liabilities, The rule must therefore be refused. Rule refused. 1 LEE and Another v. JONES. In the Exchequer Chamber, Trinity Vacation, 1864. [Reported in 17 Common Bench Reports, New Series, 482.] The facts were as follows : Under an agreement of the 1st of No- vember, 1856, James Packer had been for five years a commission-agent of the plaintiffs for the sale of coals to be delivered by them to his order, on the terms that he should from time to time give to the plain- tiffs his bills for the amount of the coals so delivered, and pay to them within six days of its receipt all money received. by him from customers for such coals, to be taken off and credited upon the bill so to be given by him. And by an agreement of the same date, between the plaintiffs and Sarah Tinson, the mother of Packer, she had become surety to the plaintiffs to the extent of £300 for the due performance by Packer of his agreement. Packer, not having for a very considerable time "carried out his agreement by settling for and paying up his bills at the expira- tion of the months during which the\^ were current," had become debtor to the plaintiffs in the sum of £1,332, and Sarah Tinson on her guaranty 1 In the following cases the surety was not exonerated although the creditor failed to disclose to him certain facts which, if known, might well have deterred him from becoming surety : — Non-disclosure to a surety for a borrower that the latter was already indebted in a large amount to the lender. Hamilton v. Watson, 12 CI. & F. 109. See also Guardi- ans v. Strother, 22 Law Times, 84. Non-disclosure to surety for lessee that lessee was in arrears on a prior lease. Roper v. Cox, L. R. 10 Ir. 200 ; Wythes v. Labouchere, 3 DeG. & J. 592, 608-9 ; Pala- tine Co. v. Crittenden, 18 Mont. 413. Non-disclosure to the surety that the principal was financially weak or insolvent. Magee v. Manhattan Co., 92 U. S. 93 ; Van Arsdale v. Howard, 5 Ala. 596 ; Ham v. Greve, 34 Ind. 18 ; Farmers' Bank v. Braden, 145 Pa. 473. Non-disclosure that principal was gambling. Atlas Bank v. Brownell, 9 R. I. 168. Non-disclosure to surety od a note for a prior debt of the principal that creditor was taking a note for the residue without a surety. Booth v. Storrs, 75 111. 438. Non-disclosure to surety for a purchaser of land that there was to be no vender's lien, if, as was the fact, that was no fraudulent motive on the part of the seller. Warren v. Branch, 15 W. Va. 21. — Ed. 2S4 LEE V. JONES. [CHAP. II. for him bad become their debtor to the extent of £300, when the plain- tiffs informed Packer that they wanted further security, and could not without it continue him in their employment, and stipulated with him that the defendant and the other parties sureties with him in the agree- ment sued upon, should by their several and continuing guaranties give the plaintiffs further security to the extent of £300 against the said James Packer. In pursuance of this stipulation, the plaintiffs caused the agree- ment sued upon to be prepared. Although, in legal construction, it ex- tends to defaults already made, as well as to defaults which might be in the future made, it gives no intimation in airy part of it of an intention that it should operate retroactively, or of any ascertained default on which it could so operate. It is silent on the fact of the breach by Packer of his agreement that he would for the coals delivered to his order give from time to time his acceptances, and take them up at the expiration of the months during which they were current ; on the fact that, by not having done so, he had incurred a debt to the plaintiffs of £1,332, and involved Sarah Tinson in a liability for £300 ; on the fact that the plaintiffs had informed him that he must give them further se- curity or relinquish their employment ; on the fact that the defendant, on his signature of the agreement, would, not contingently only on future defaults, but at once, become liable for £100 : and none of these facts, of which the defendant was entirely ignorant, were communicated to him by the plaintiffs. Nor was an}- opportunity for inquiry of them, or of those who represented them, afforded to the defendant. The plaintiffs personally had no communication with him, and never saw him : it was left to Packer, whose employment and livelihood, as well as the liability of Sarah Tinson, were at stake, to obtain the consent of the defendant and of the other sureties, in the best way he could, and as he thought proper ; and the collector of the plaintiffs, who was sent round with the agreement to procure the signatures of the defendant and of the other sureties, had no authorit} 7 to answer questions. 1 Blackburn, J. I am of opinion that in this case the decision of the Court below should be affirmed. The question is, whether, under the circumstances stated in the case, there was evidence to go to the jury in support of the averment of fraud ; for I think that the averments of undue concealment carry the case no further, and that, unless actual fraud was proved, the substance of the issue was not proved. It was decided in The North British Insurance Company v. Llojd, ihat the rule that all material circumstances known to the assured must be disclosed, is peculiar to contracts of insurance, and that it does not extend to contracts of guarant}'. I concur in this, which I think founded upon principle as well as authority. It was pointed out by the Chief Baron in the argument in the present case, that a surety is in general a friend of the principal 1 This statement of the case is taken from the opinion of Shee, J. — Ed. SECT. X.J LEE V. JONES. 285 debtor, acting at his request, and not at that of the creditor ; and, in ordinary cases, it ma}' be assumed that the suret} - obtains from the principal all the information which he requires : and I think that great practical mischief would ensue if the creditor were by law required to disclose everything material known to him, as in a case of insurance. If it were so, no creditor could rel}' upon a contract of guaranty, unless he communicated to the proposed sureties everything relating to his dealings with the principal, to an extent which would in the ordinary course of things be so vexatious and annoying to the principal and his friends, the intended sureties, that such a rule of law would practically prohibit the obtaining of contracts of suretyship in matters of business. This is well pointed out by Lord Campbell in his judgment in Hamilton v. Watson. 1 But I think, both on authority and on principle, that, when the creditor describes to the proposed sureties the transaction proposed to be guaranteed (as in general a creditor does), that description amounts to a representation, or at least is evidence of a representation, that there is nothing in the transaction that might not naturally be expected to take place between the parties to a transaction such as that described And if a representation to this effect is made to the intended suret}' by one who knows that there is something not naturally to be expected to take place between the parties to the transaction, and that this is un- known to the person to whom he makes the representation, and that, if it were known to him, he would not enter into the contract of surety- ship, I think it is evidence of a fraudulent representation on his part. I think that it appears in Hamilton y. Watson that such was the opinion of Lord Campbell ; and I think that on this principle are founded the judgments of Lord Eldon in Smith v. The Bank of Scotland, and of the Court of King's Bench in Pidcock v. Bishop. In the present case the plaintiffs had no personal communication with the defendant, the surety ; and when they sent the agreement to him for execution, the}- sent it by an agent who had no authorit}' from the plaintiffs to make any statement whatever, or to do anything more than obtain the defendant's signature to the agreement thus sent. The argument for the plaintiffs before us was, in substance, that, under such circumstances, though there might be a concealment or non- disclosure of material facts, there was not and could not be any misrep- resentation on the plaintiffs' part ; and that, without it, there could be no fraud : and during the argument I was inclined to be of that opinion ; but, on consideration, I have come to the conclusion that in this case there was evidence of intentional deceit, by a false representation of the kind I have above referred to, amounting to actual fraud. The written agreement which before it was executed the plaintiffs sent to the defendant, recites that Packer, the principal, had been for some time salesman to the plaintiffs on terms b}- which he was, in sub- stance, to be a del credere agent, settling and paying for what he had sold monthly, and that they had required from him security to induce 1 12 CI. & F. 109. 286 LEE V. JONES. [CHAP. IL them to continue him in the employment, and stipulated that the defend- ant and others should give them a floating and continuing guaranty for the term of three } - ears from the date thereof, to secure the amount of any balance which might at any time be due to them on the coal account. I think this was evidence of, or rather, if not qualified by other mat- ters, amounted to a representation that there was nothing in the trans- action between the plaintiffs and Packer which might not in the ordinary course of affairs be expected to have taken place between them as par- ties to such a transaction. It is stated in the case (par. 8) that, at the time when this agreement was sent to the defendant, a balance of £1,332 was actually then due from Packer, he not having for a very considerable time settled for and paid up at the expiration of the current months, as stipulated by the agreement. It is, however (in favor of the plaintiffs), further stated that there was no evidence that the plaintiffs were aware that Packer had actually received the money from the customers. Now, whether the handing the agreement by the plaintiffs to the de- fendant amounted to an inaccurate representation or not, depends, as I think, on the question whether in such a transaction as that described in the agreement, it might or might not naturally be expected that the masters might have allowed a balance of this extent to accumulate, and might have allowed the account to stand over unsettled for so long a time. In Hamilton v. "Watson the transaction was a security for a banker's cash account ; and the decision of the House of Lords was, that, in such a case, it might be so naturally expected that the proposed principal had already overdrawn his account, that there was no evidence of a representation that he had not. In Smith v. The Bank of Scotland, where the security was given for the good behavior of a bank agent, it was held that an allegation that the bank knew that the principal had misconducted himself in his office, and that this fact was concealed from the sureties, ought to have been admitted to proof in the court below. I think the effect of Lord Eldon's judgment in that case is, that it was so little to be expected that a bank would continue in their service an agent who had already by breach of trust run into their debt, that the application for security amounted, as he says, to " holding him forth to the sureties as a trustworthy person." 1 I think that it must in every case depend upon the nature of the transaction, whether the fact not disclosed is such that it is impliedly represented not to exist ; and that must generally be a question of fact proper for a jury. If in this case the amount of the balance already due had been small, or the period during which the accounts were left unsettled short, there would in m}' opinion have been such a mere scin- tilla of evidence as would not have warranted the jury in finding the verdict of fraud ; and the judge would have been justified in withdraw- ing the question from their consideration. But, as it is, the amount of ' 1 Dow, 292. SECT. X.] LEE V. JONES. 287 the balance already due being, relatively to the amount of the security,, so large, and the period during which no settlement had taken place being so considerable, I think the judge could not have withdrawn the case from the consideration of the jury, who might well come to th6 conclusion that the sending of the agreement in these terms amounted to an inaccurate representation. This would not be enough to support the verdict on the plea of fraud, unless it was further established that the plaintiffs made the inaccurate representation, intending to deceive the defendant, and induce him to enter into the contract in the belief that what was represented did exist, whilst the plaintiffs knew it did not exist. But of that also I think there was sufficient evidence. The improbability that any one could suppose that sureties would have entered into such an agreement if they had known the truth, is so great that the jury might well think that the plaintiffs knew that tha defendant was in ignorance of it : and if the jury so thought, they might from that alone draw the inference that the representation was fraudu- lently intended to deceive. This is strengthened by the facts that the plaintiffs apparently avoided having any personal communication with the proposed sureties, and sent the agreement for execution by an agent who had no authority from them to make any statements ; from which the jury might perhaps draw the further inference that the plain- tiffs took pains to avoid the risk of the sureties asking questions and being undeceived. It is not essential, to constitute fraud, that there should be any mis- leading by express words ; it is sufficient if it appears that the plaintiffs knowingly assisted in inducing the defendant to enter into the contract, by leading him to believe that which the plaintiffs knew to be false, the plaintiffs knowing that, if he had not been thus misled, he would not have entered into the contract. For the reasons above given, I think there was in this case evidence to support the verdict ; and consequently the judgment, in my opinion, should be affirmed. 1 Judgment affirmed? 1 The concurring opinions of Shee, J., Crompton, J., and Channell, B., and the dissenting opinions of Pollock, C. B., and Bramwell, B., are omitted. — Ed. 2 Lawder v. Lawder, Ir. R. 7 C. L. 57 (s*—^), Accord. — Ed. 288 sooy ads. state of new jersey. [chap, il J. SOOY and Others ads. THE STATE OF NEW JERSEY. In the Supreme Court, New Jersey, February Term, 1877. [Reported in 39 New Jersey Reports, 135.] Beasley, C. J. 1 The next plea to which the demurrer is addressed sets up, as a defence to the action, the non-communication on the part of the State of certain facts within its knowledge, touching the position and standing of the treasurer, and which it is alleged ought, in good faith, to have been disclosed to the sureties at or before the execution of the bond. The allegations in the plea on this score are to this effect : that for a long time prior to the making and delivery of the bond, the said Josephus Soo}', Junior, had at various times embezzled and wasted divers sums of the money of the State which had been committed to his custody, and had applied them to his own use, and had therein been guilty of defalcation in his office, and that such misdeeds were known to the State. There are other statements in the plea which will be considered in the sequel, the foregoing averments being separated from these with a view of considering the naked question whether the failure on the part of the State to disclose the circumstance stated will, per se, illegalize the bond. Upon turning to the authorities it will be found that there has been some contvariet}" in judicial opinions touching this subject. That the obligee is bound, in morals and in law, to disclose to the suret}*, before he takes his guaranty, certain conditions of the transaction, does not appear to have been doubted ; but the extent of such obligation has been the matter in disagreement. Lord Truro, in expressing his views in Owen v. Homan, 2 said : " I am not aware that either the text-books or the decisions distinctby define the extent of the obligation and re- sponsilulit} r which rest upon the creditor in regard to the suret}- being vnade acquainted with all the material circumstances connected with the transactions to which the suretyship is to be applied. The cases which are reported have generally arisen out of transactions in which there lias been personal communication between the creditor and the surety ; and the clear law deducible from these decisions is, that the creditor must make a full, fair, and honest communication of every circumstance calculated to influence the discretion of the surety in entering into the required obligation. Lord Cranworth, while sitting as Lord Commis- i.ioner, well observed that applications for special injunctions are very much governed by the same principles which govern insurances, where the assured is bound to give to the underwriter all the information in tiy power, to enable him to estimate the character of the risk he is in- 1 Only a portion of the opinion of the Court is given. — Ed. 2 3 Mac. & G. 378. SECT. X.] SOOY ads. STATE OF NEW JERSEY. 289 vited to undertake. I think the same principle is applicable to the case of sureties, and that when communication does take place between the creditor and surety, the duty of the creditor cannot better be illustrated than b} r the case of the assured." But this view of the Lord Chancellor has been entirety exploded. In the course of the argument in the case of the North British Insurance Co. v. Lloyd, Baron Parke says that the decision in Owen v. Homan was carried to the House of Lords, and the opinion above cited, of Lord Truro, was not acquiesced in ; and in Hamilton v. Watson 1 the doctrine is still more distinctlj- rejected. In this last case Lord Campbell shows, to the point of demonstration, the impracticability of applying the rule of disclosure which obtains in favor of the underwriter, to the formation of suretyships. But while it is thus settled that the principles of insurance and guar- anty, in this respect, are not to be assimilated, and although the de- cisions have put the doctrine, so far as it regulates the relation of principal and suret}-, on the footing that fraud must exist to invalidate the obligation of the latter, nevertheless it seems to me that the facts set forth in this plea must be deemed a sufficient defence to this action. I justify this result by the assumption that if these facts thus stated are true, a fraud has been committed which will invalidate the bond sued on. The gravamen alleged in this plea is, that Mr. Sooy had antecedent^ been in the employment of the State as treasurer ; and that during such term he had been guilty of defalcations and embezzlements which were known to the State ; and that no disclosure of such malpractices had been made to the sureties, the}* being ignorant of them. Such a state- ment describes a fraud ; at all events, a fraud in law. A person called in as a guarantor of the honest} 7 of an employee has the right to infer that the continuance of such employee in the service of the master is a tacit assertion, on the part of the latter, that there has at least been nothing criminal in the past conduct of the servant in the course of his employment. Such an inference is the natural and reasonable result of the circumstances ; and hence the obligee is chargeable with the knowl- edge that the surety is acting on that basis, and with such knowledge it is impossible to acquit him of bad faith if he allows the surety-ship to take effect. Where silence is reasonabl}' sure, in the ordinary course of things, to produce the effect of deceit, silence must be culpable ; and in law the one should be regarded as the equivalent of the other. In the present instance the duty of disclosure was of the most impera- tive character ; it is the case of an officer who had violated his official oath and defrauded the public, and had thus committed crimes of a na- ture highly penal. It was therefore obvious that, in becoming bound for the honest conduct of such an officer, the sureties were acting under a delusion as to the real facts of the transaction. Neither in morals nor in law can an obligee stand by and knowingly allow an obligor to take a risk which the former knows the latter has no intention to assume. Whatever else may be in doubt on this subject, it appears to me that l 12 CI. & Fin. 109. 19 290 sooy ads. STATE of new jeksey. [chap. II, the authorities have settled that, under such circumstances, not to dis- abuse the guarantor of the obvious mistake on which he is about to in- cur the obligation is suppressio veri, because good faith calls for the disclosure requisite to give to the contract the effect which the one party knows the other party expects it to have. The leading case upon this point is that of Smith y. The Governor and Company of the Bank of Scotland. . . , 1 In nry opinion, the law should be regarded as at rest upon this sub- ject, to the extent that it is the dut}' of a person taking a guaranty for the good conduct of an employee to disclose the past malpractices of such employee in the course of the business to which the guaranty re- lates, and that if such duty is not performed, the instrument so taken is, ipso facto, invalid. The continuance of an agent in an employment is an act so expressive of trust and confidence that it is tantamount to an express declaration to that effect; and hence it must, under usual circumstances, have all the effect of a meditated fraud, if the person so retaining the agent can be permitted to disown the implications inevi- tably arising from his own conduct. The conclusion from this view is, that the facts set out in this plea, and which are admitted by the demurrer, are a legal defence to the present action. 2 Argued at November Term, 1876, before Beasley, Chief Justice, and Justices Scudder, Dixon, and Reed. 1 The learned judge here discussed the cases, Smith v. Bank of Scotland, Railton v. Mathews, Phillips v. Foxall, and Franklin Bank v. Cooper. — Ed. '-' Guardian Co. v. Thompson, 68 Cal. 208; Anaheim Co. v. Parker, 101 Cal. 483 (semble); Wilson v. Monticello, 85 Ind. 10; Bank v. Anderson Co., 65 Iowa, 692; Bellevue Association v. Jeckel (Kentucky, 1898), 46 S. W. R. 482; Franklin Bank v. Moore, 39 Me. 542 ; 36 Me. 179 ; Traders' Co. v. Herber. 67 Minn. 106 ; Third Bank v. Owen, 101 Mo. 558 ; Harrison v. Lumbermen Co., 8 Mo. Ap. 37 ; Wells v. Walker (New Mexico, 1897), 50 Pac. R. 353 ; Howe Co. v. Farrington, 82 N. Y. 121 (semble) ; Ludekeus v. Pscherhofer, 76 Hun, 548 ; U. S. Co. v. Salmon, 91 Hun, 535 ; Dinsmore v. Tidball, 34 Ohio St. 411 ; Smith v. Josselyn, 40 Ohio St. 409 ; Wayne v. Commercial Bank, 52 Pa. 343 {semble.) ; Atlas Bank v. Brownell, 9 R. I. 168 ; Wilmington v. Ling, 18 S. Ca. 116 ; Screwmen v. Smith, 70 Tex. 168 (semble) ; Cashin v. Perth, 7 Grant, Ch. 340; East Zorra v. Douglas, 17 Grant, Ch. 462; Peers v. Oxford, 17 Grant, Ch. 472 (semble). Accord. Roper v. Sangamon Lodge, 91 111. 518; Cawley v. People, 95 111. 249; iEtna Co. v. Mabbett, 18 Wis. 667, Contra. Importance was attached, in the cases cited in the preceding paragraph, to the fact that the obligee did not procure the surety's signature, and was not present when he signed the obligation. See also, on this point, Magee v. Manhattan Co., 92 U. S. 93. Non-disclosure after Inquiry by Surety. If a surety asks the creditor for information as to the subject-matter of the proposed suretyship, the creditor must, if he answers at all, make a full disclosure of everything within his knowledge that would naturally influence the decision of the surety to sign or not to sign the instrument. Bank v. Anderson Co., 65 Iowa, 692 ; Remington Co. v. Kezertee, 49 Wis. 409. Sureties for Public Officers. The doctrine of the principal case has been held in a few cases, but for differing reasons, to be inapplicable in cases of suretyship for mu- nicipal or State officers. State v. Rushing, 17 Fla. 226 ; State v. Dunn, 1 1 La. An. 549 ; Frownfelter v. State, 66 Md. 80 ; Lawder v. Lawder, Ir. R. 7 C. L. 57 ; Byrne v. Mnzio, L. R. 8lr. 396. — Ed. SECT. X.] BOSTWICK V. VAN VOOKHIS. 291 H. BOSTWICK, Respondent, v. S. L. VAN VOORHIS, Appellant. In the Court of Appeals, New Yoke, February, 1883. [Reported in 91 New York Reports, 353.] Earl, J. 1 This action was brought by plaintiff, as receiver of the National Bank of Fishkill, against the defendant, as sole executor of Coert A. Van Voorhis, deceased, who was one of the sureties upon the official bond of Alexander Bartow, cashier of the bank. Bartow was teller of the bank before he was appointed cashier thereof, and it is claimed that the directors, before his appointment as cashier, were aware of certain misconduct of his as teller, which they concealed from the sureties, and which they were bound, acting in good faith, to have made known to them. It is undoubtedly true that if the directors had knowledge that Bartow had been dishonest and unfaithful in his office as teller, they were bound to apprise the sureties of that fact, otherwise they could not hold them. But mere irregu- larities or omissions of duty on the part of Bartow while he was acting as teller, which did not affect his moral character or his official integ- rity and fidelity, even if known to the directors, would not enable the sureties to defend upon the ground that they had been deceived. Sure- ties are supposed to know the character of their principal, and to be willing to be bound for his fidelit}-. They must inquire and inform themselves of all the facts they desire to know, and if they omit to seek for or obtain the requisite information, they cannot easily avoid the bond upon inferential or unsatisfactory proof that they were drawn into signing it Irv bad faith on the part of the obligee. Before a bond in such a case can be avoided, the fraud and bad faith should be brought home to the obligee by quite clear and decisive evidence, otherwise bonds of this character will furnish a very precarious security to the parties who take them. In Tapley v. Martin - it was said : " The object of the bond is to guarantee to the bank the faithful performance by the cashier of his duties. His duties and obligations are not affected by the negligence of the officers or agents of the bank, and such negligence does not discharge the sureties ; " and it was held that the surety upon the bond of the cashier of a national bank is not dis- charged by the fact that the cashier had, before the bond was given, committed frauds upon the bank, if such frauds were unknown to the officers of the bank, although the}* were guilt}' of gross negligence in not discovering them. 3 In Atlantic & Pacific Telegraph Co. v. Barnes 4 it was held that " the sureties upon a bond given by an em- 1 Only a portion of the opinion of the Court is given. — Ed. 2 116 Mass. 275. 3 Anaheim Co. v. Parker, 101 Cal. 483 ; Tapley v. Martin, 116 Mass. 275 ; Bowne v. Mt. Holly Bank, 45 N. J. 360; Wayne v. Commercial Bank, 52 Pa. 343, Accord. — Ed. * 64 N. Y. 385. 292 BOSTWICK V. VAN VOORHIS. [CHAP. II ployee to bis employer, conditioned that the former will faithfully account for all moneys and property of the latter coming into his hands, are not discharged from subsequent liability by an omission on the part of the employer to notify them of a default on the part of their principal, known to the employer, and a continuance of the em- ployment after such default, in the absence of evidence of fraud and dishonesty on the part of the employee." In Board of Supervisors v. Otis 1 it was held that kt mere laches on the part of an obligee or creditor, or non-performance of some act which might prevent loss to a surety, will not, in the absence of some express covenant or condi- tion, discharge the surety. To be available to him as a defence, the neglect must be some positive duty owing to him." In Atlas Bank v. Brownell, 2 an action on a cashier's bond, it was held, that to avoid a bond on the ground of fraud on the part of the bank, or its directors, there must be a fraudulent concealment of something material for the surety to know. A concealment which will avoid a guaranty must be a fraudulent one. If not fraudulent in fact or in law the defence is not made out; and in Story's Equity Jurisprudence (§ 204), it is said that " the concealment to make void a contract must amount to the suppression of facts which one party is bound in conscience and duty to disclose to the other, and in respect to which he cannot innocently be silent." It is perceived from these authorities that the law simply requires from the obligee to sureties upon a bond good faith. He must not intentionally mislead them by what he says or does, or omits to say or do, and bad faith onl}' on his part, which has misled the surety to his damage, will enable the surety to defend against the bond. In this case, the claim is that the cashier who preceded Bartow had for some years been a defaulter to the bank, and that Bartow, as teller, aided in concealing and covering up the defalcation for years. The answer to this is that it does not appear, and was not found by the referee, that in anything Bartow did in reference to the accounts and transactions of the former cashier he acted dishonestly or fraudulently, or that he knew the bank was to suffer an}- wrong or injury from the cashier's conduct. There was nothing in what Bartow did as a subor- dinate of the cashier, in reference to the cashier's accounts and trans- actions with the bank, showing that he was intentionally dishonest or unfaithful to the trust reposed in him by the bank ; and such evidently was the view of the facts taken Iry the directors when, with full knowl- edge of all the facts, they appointed him cashier. Upon such facts it is quite clear that the sureties upon the bond are unable, within any authority that can be found, to avoid the bond on the ground of fraud. Judgment affirmed.* 1 62 N. Y. 88. 2 9 E. I. 168. 3 Home Co. v. Holway, 55 Iowa, 571 ; Howe Co. v. Farrington, 82 N. Y. 121; Ludekens v. Pscherhofer, 76 Hun, 548 (semble) ; Screwman v. Smith, 70 Tex. 168; Peers ». Oxford, 17 Grant, Ch. 472, Accord. Smith v. Josselyn, 40 Ohio St. 409, Contra. — Ed. S^CT. X. ' POWERS DRY-GOODS CO. V. HARLIN. 293 POWERS DRY-GOODS CO. v. M. J. HARLIN and Others. In the Supreme Court, Minnesota, May 10, 1897. {Reported in 68 Minnesota Reports, 193. J Collins, J. 1 After defendants Harlin Bros, had made an assign- ment for the benefit of their creditors, among whom was plaintiff, a corporation, a composition agreement was made and entered into be- tween the debtors and each of their creditors upon a basis of 33 £ per cent of the entire indebtedness. In accordance with this agreement, plaintiff accepted and received the debtors' promissory notes, with sureties. Upon trial by the Court without a jury, the Court found that, before the composition agreement was signed by any of the creditors, plain- tit!', as a condition to its signing the same, and without the knowledge of any of the other creditors of Harlin Bros., and without the knowl- edge of any of the parties who became sureties, demanded that Harlin Bros, give their written promise to pay plaintiff a larger percentage than was to be paid to the other creditors, and that pursuant to this demand, and before plaintiff signed the composition agreement, and as a condition to said signing, Harlin Bros, acceded to the demand, and thereupon executed and delivered to plaintiff three promissory notes , for the balance due, 66§ per cent of plaintiff's entire claim, taking back from the plaintiff its written stipulation to discharge and surrender the note last mentioned upon payment of 25 per cent of the same. The question in this case is, must this secret agreement between the plaintiff creditor and the defendant debtors be held to have discharged the sureties upon the notes given in accordance with the terms of the composition agreement? The answer to this question turns, we think, upon whether or not the composition agreement itself was rendered invalid by the execution of the secret agreement. 2 The duty of a creditor to a surety is thus stated in Doughty v. Savage : 3 — "It is a clear and well-settled principle that a security given by a surety is voidable on the ground of fraud if there is, with the knowl- edge or assent of the creditor, such a misrepresentation to or conceal- ment from the surety of the transaction between the creditor and his debtor that, but for the same having taken place, either the suretyship would not have been entered into at all, or, being entered into, the extent of the suretj-'s liability might be thereby increased." A number of cases are cited in support of this doctrine. It has also been approved in this court recently, in Trader's v.. Herber.* The 1 Onlv a portion of the opinion of the Court is given. — Ed. 2 This question the Court answered in the affirmative. — Ed. 8 68 Minn. 155. * 67 Minn. 106. 294 POWERS DEY-GOODS CO. V. HAELIN. [CHAF. i« remaining inquiry is, would knowledge of the existence of the secret agreement have been calculated to materially influence the sureties when determining whether they would enter into their contracts of suretyship on the composition notes? The object of that agreement was to release the debtors from a portion of their indebtedness, and the sureties entered into their contract for this purpose, induced so to do by the representations and belief that the debtors were to be freed and released from any further liability. In this they were deceived., and through the concealment of the plaintiff, payee of the notes, the object was not attained. By reason of the fraud it was within the power of the innocent creditors to ignore the composition, and recover the balance due upon their claims. The ability of the debtors to meet their notes, or to indemnify the sureties, was hazarded and impaired at once by the contingency. That the extent of the sureties' liability and the risk they had assumed were materially increased is obvious. The concealment was a fraud upon them, and exonerated them from their obligations. Order affirmed. 1 1 In Jungk v. Reed, 9 Utah, 49, and Jungk v. Holbrook (Utah, 1897), 49 Pac. E. 305, the surety for the performance of an undertaking by one firm in favor of another firm was exonerated by reason of the non-disclosure by the obligee firm that one X was a common member of both firms. — Ed. SECT. XI.] PHILLIPS V. FOXALL. 295 SECTION XI. Retention of Principal in Service after Knowledge of his Dishonesty* PHILLIPS v. FOXALL. In the Queen's Bench, July 6, 1872. [Reported in Law Reports, 7 Queen's Bench, 666.] The judgment of Cockburn, C. J., Lush and Quain, JJ., was de- livered by Quain, J. 1 This is an action brought by the plaintiff on a contract whereby the defendant guaranteed the honesty of one John Smith, a servant in the employ of the plaintiff, to the extent of £50. The con- tract is set out in the declaration, and recites the employment of Smith, and that it was his duty to collect money for the plaintiff and account to her for all sums of mone}^ so collected ; and that the plaintiff had before the giving of the guaranty held in her hands a sum of money belonging to Smith, as a security for the proper performance by Smith of his duty, which sum the plaintiff had agreed to pay back to Smith on receiving the defendant's guaranty. The declaration then proceeds to allege that in consideration that the plaintiff would pa}' over to Smith the money so held, and continue him in the service of the plaintiff in the same capacity as before, the defendant guaranteed and promised the plaintiff to make good and be answerable to her for any loss, not ex- ceeding £50, which she might at any time sustain through any breach by Smith of his duty during the continuance of such service ; and it alleges a breach, in the usual form, that Smith failed to pay over sums of money to the amount of £50, which he had collected on behalf of the plaintiff. In answer to this declaration the defendant divides the time during which the service lasted, and during which the loss was sustained, into two periods: first, from the 8th of June, 1869, when the contract was made, to the 20th of November, 1869 ; and, secondly, from the last- mentioned day to the 4th of April, 1871, when the service termi- nated. As to the first period, the defendant admits his liability for loss incurred by the acts of the servant during that period, and he has paid £10 into court, which he alleges is sufficient to reimburse the plaintiff for such loss. As to the second period, he pleads a plea on equitable grounds, which is to this effect : that the servant had been guilty of defalcations in the course of his service between the 8th of June and the 20th of November, 1869, which the plaintiff had discovered on the latter day, and that the plaintiff then, without communicating 1 Only the opinion delivered by Quain, J., is given. — Ed. 296 PHILLIPS V. FOXALL. [CHAP. IL such discovery to the defendant, and while the defendant was ignorant of the servant's dishonesty, agreed with the servant to continue him in her emplo}' as before, and the servant on the other hand agreed to pa}* to the plaintiff £3 a month on account of the previous defalca- tions. The plea then alleges that the servant was continued in the plaintiff's service accordingly on these terms. The plea then goes on to state that the loss in respect of which the plea is pleaded was occa- sioned by acts of dishonesty committed by the servant during the con- tinuance of the service, as so agreed on, after the 20th of November, and between that time and the termination of the service, the defendant during that time being wholly ignorant of the previous defalcations of the servant ; and that by reason of the plaintiff not having given the defendant notice of such defalcations he was prevented from revoking the guaranty. To this plea the plaintiff has demurred, and the question argued be- fore us was whether the plea afforded a good defence to so much of the cause of action as it was pleaded to ; namely, the loss occasioned by the defalcations of the servant committed between the 20th of November and the end of the service. We are of opinion that the plea is good. "We think that in the case of a continuing guaranty for the honesty of a servant, if the master discovers that the servant has been guilty of acts of dishonesty in the course of the service to which the guaranty relates, and if instead of dismissing the servant, as he may do at once and without notice, he chooses to continue in his employ a dishonest servant, without the knowledge and consent of the surety, express or implied, he cannot afterwards have recourse to the surety to make good any loss which may arise from the dishonest} 7 of the servant during the subsequent service. Suppose that the state of facts, which has arisen here in the course of the service, had existed before or at the time when the guaranty was given, — in other words, that the servant had previously committed defalcations in the plaintiff's service, and had agreed to repay them at the rate of £3 a month, — and that this fact had been concealed b}- the master from the defendant when he gave the guarant}', it cannot, we think, be doubted that a fraud would have been committed on the surety which would have relieved him from all liability on the con- tract. This we think is established by the judgments in the House of Lords in Smith v. Bank of Scotland, and in Eailton v. Mathews. In the former case Lord Eldon sajs, " If a man found that his agent had betrayed his trust, that he owed him a sum of money, or that it was likely he was in his debt ; if under such circumstances he required sureties for his fidelity, holding him out as a trustwortlvy person, know- ing or having ground to believe that he was not so, then it was agree- able to the doctrines of equity, at least in England, that no one should be permitted to take advantage of such conduct, even with a view to security against future transactions of the agent." In the latter case SECT. XI.] PHILLIPS V. FOXALL. 297 Lord Cottenham cites with approbation the opinion of Lord Eldon in Smith v. Bank of Scotland; and Lord Campbell adds, k 'If the de- fenders had facts within their knowledge which it was material the sureties should be acquainted with, and which the defenders did not disclose, in my opinion the concealment of those facts — the undue con- cealment of those facts — discharges the surety." We do not think that the principles of law as laid down in these cases have been materially altered by the decision of the House of Lords in the subsequent case of Hamilton v. Watson, 1 or by that of the Court of Exchequer in the North British Insurance Co. v. Lloyd. In the former case the principle above mentioned was not denied, but the question that arose was as to its application to the facts of that particular case ; and Lord Campbell states that the criterion for the necessity of volun- tarily disclosing any particular fact in cases of this kind may be, whether the fact not communicated was one that could " not naturally be ex- pected to have taken place between the parties who are concerned in the transaction." In North British Insurance Co. v. Lloyd, the Court of Exchequer held that the rule as to the effect of concealment in ma- rine insurance cases did not apply to contracts of suretyship, and that in the latter cases the concealment must be fraudulent in order to avoid the contract. In Lee v. Jones, the majority of the judges in the Ex- chequer Chamber held that a concealment by the creditor, that at the time of the contract the principal debtor was already indebted to the creditor in a considerable amount, — of which the surety was ignorant, — was evidence to go to the jury of such a fraud on the surety as would discharge him from liability. It must depend (as observed by Black- burn, J., in the case last cited) "upon the nature of the transaction in every case, whether the fact not disclosed is such that it is impliedly represented not to exist." We cannot doubt but that previous acts of dishonesty by the servant in the same service, known to the master, would be such a fact, and if concealed from the surety would avoid the contract. Vide Story's Equity Jurisprudence, vol. i. §§215 and 324. If, therefore, it is correct, as we think it is on these authorities, to say that such a concealment as is here pleaded, if it had been practised at the time when the contract was first entered into, would have dis- charged the surety, we think that in the case of a continuing guarant} 7 a similar concealment made during the progress of the contract ought to have a similar effect as regards the future liability of the surety un- less his assent has been obtained, after knowledge of the dishonesty, that his guaranty should hold good during the subsequent service. One of the reasons usually given for holding that such a concealment as we are here considering would discharge the suret}' from his obliga- tions is, that it is only reasonable to suppose that such a fact, if known to him, must necessariry have influenced his judgment as to whether he would enter into the contract or not ; and in the same manner it seems to us equally reasonable to suppose that it never could have entered i 12 CI. & F. 109. 298 PHILLIPS V. FOXALL. [CHAP. IL into the contemplation of the parties that, after the servant's dishonesty in the service had been discovered, the guaranty should continue to apply to his future conduct, when the master chose for his own purposes to continue the servant in his employ, without the knowledge or assent of the surety. If the obligation of the surety is continuing, we think the obligation of the creditor is equally so, and that the representation and understanding on which the contract was originally founded con tinue to apply to it during its continuance and until its termination. If the guaranty at its inception was founded, as suggested by Lord Eldon in Smith v. Bank of Scotland, on the trustworthiness of the ser- vant, so far as that was known to both parties, as soon as his dishonesty is discovered and becomes known to the master the whole foundation for the continuance of the contract, as regards the surety, fails ; and it seems to us in accordance with the plainest principles of equity and fair dealing that the master should, on making such discovery, either dis- miss the servant, or, if he chooses to continue him in his employ without the knowledge or assent of the surety, that he must himself stand the risk of loss arising from any future dishonest}-. "It is the clearest and most evident equity " (says Lord Loughborough, in Rees v. Berring- ton l ) " not to cany on any transaction without the knowledge of him (the surety) who must necessarily have a concern in eveiy transaction with the principal debtor. You cannot keep him bound and transact his affairs (for they are as much his as your own) without consulting him. You must let him judge whether he will give that indulgence contrary to the nature of his engagement." Thus, in the present case the conduct of the master in retaining the servant in his employ, when he might have discharged him for dishonest}-, seems, in the words of Lord Loughborough, an indulgence granted to the servant without the as- sent of the surety, and contrary to the nature of his engagement. The time at which the surety will be discharged from further liability in cases of this kind will vary according to the circumstances of each case ; but we intend our judgment to apply only to cases like the one now before the Court, where the master, having the power of at once discharging the servant for dishonest}*, deliberately continues him in his service after he becomes aware of the dishonesty, and without the assent or knowledge of the surety. No case directly in point, either in favor of this plea or against it, has been cited before us. In Peel v. Tatlock, 2 a question arose how far the concealment of the servant's embezzlement for three years after the ter- mination of the service would affect the liability of the surety. No de- cision was, however, given on that point, and the case contains only a dictum of Eyre, C. J., that an industrious (by which we presume he meant an intentional or fraudulent) concealment might have an effect on the liability of the guarantor. In Smith v. Bank of Scotland 3 there is an observation of Lord Redesdale, made in the course of the argument, 1 2 Ves. 540, 543. 2 1 B. & P. 419, 423 ; and see p. 421. 3 1 Dow, at p. 287. SECT. XI.] PHILLIPS V. FOXALL. 299 which has a closer bearing on the present question. In that case Paterson, the bank agent, seems to have given security to the bank, apparently at the comminencement of his service ; afterwards, and while the service continued, and after his accounts had been inspected and reported on by an oilicer of the bank, he was called on to give ad- ditional security, and Smith, the appellant, gave a bond as such addi- tional security. Smith raised an action of reduction of this bond, and in that action insisted on his right to inspect the above report of the officer of the bank. On this Lord Redesdale observed: "Supposing the report showed that Paterson was no longer trustworthy, and the bank had trusted him notwithstanding, upon decided cases the prior security would be discharged from all the consequences of subsequent transactions, as contrary to the faith of the contract. And then it might be a question what bearing this circumstance might have on the new sureties." The cases to which Lord Redesdale alludes are not men- tioned, but it seems pretty clearly to have been his opinion that if the master discovers the dishonesty of his servant during the service, and afterwards continues to trust him notwithstanding, the surety for the servant would be discharged from all liability for subsequent losses. In the case of Shepherd v. Beecher, 1 before Lord Chancellor King, a father, on binding his son apprentice, gave a bond for his fidelity. Some years afterwards the apprentice embezzled £200 of the master's money, of which the master gave notice to the father, and demanded the mone}'. The father paid the amount, but sent a letter requesting the master not to trust the apprentice with cash in the future, or at least to do so very sparingly. The apprentice continued afterwards with the master for several years, and committed further embezzle- ments, of which the father had no notice until two years after the expiration of the apprenticeship, when the bond was put in suit. The Lord Chancellor held that the father continued bound, stating appar- ently as the ground of his judgment " that the father ought not to have satisfied himself with sending the letter and taking no further care of the matter, but should have endeavored to make some end with the master, and to have got up the bond." This decision seems to us to rest on the fact that the father, instead of taking measures to have the bond delivered up, as he might have done, assented to continue bound after he had notice of the first embezzlement, and that the other em- bezzlements were not actually ascertained until after the expiration of the apprenticeship. It is well established that a surety, after he has been discharged from his contract by the act of the creditor, may revive his liability by a subsequent promise or assent. Mayhew v. Crickett ; 2 Smith v. Winter. 3 In the present plea it is alleged as a conclusion of law that, by reason of the concealment, the defendant was prevented from re- voking the guarant}- and compelling Smith to pay the money for which i 2 P. Wms. 288, 290. 2 2 Swan. 185. 3 4 M. & W. 454. 300 PHILLIPS V. FOXALL. [CHAP. IL the defendant was liable. The discharge of the suret}- in the present case seems to us to arise rather out of the nature and equity of the con- tract between the parties than upon any assumed right of revocation. We think the surety is discharged unless he assents or agrees, after he has had knowledge of the dishonesty, that the guaranty shall hold good for the subsequent service ; but, as a revocation of the guaranty as soon as the dishonesty has come to his knowledge will be the best evidence of dissent, whether his discharge from the contract is founded on express revocation, or want of assent after notice of the dishonesty, seems rather a question of words than of substance. In Parsons on Contracts, vol. ii. p. 31, the rule as to the right to re- voke a guaranty like the present is thus stated : "If the guaranty be to indemnify for misconduct of an officer or servant, the promise is revo- cable, provided the circumstances are such that, when it is revoked, the promisee may dismiss the servant without injury to himself on his fail- ure to provide new and adequate sureties." No judicial authority is cited in support of this proposition, and therefore it can only be cited as the opinion of the writer. It will be seen that he confines the right of the surety to revoke his guaranty to those cases where the master may, on the revocation being made, dismiss the servant without injury to himself. The present case is distinctly within the limitation, and there can be no doubt but that the right of the master at once to discharge the servant on discovering his dishonesty, and so place himself in statu quo, is a most material ingredient in the consideration of the question. Since the argument of this case, the judgment of Malins, V. C, in Bur- gess v. Eve, 1 has been published. The chief question in that case was whether the contract before the Court was or was not a continuing guar- anty ; but in the course of his judgment the Vice-chancellor expresses an opinion which directly applies to the present case. " My opinion is " (he says), " and I have no hesitation in expressing it, that a person who gives a guaranty would have a right to say to the person taking it, ' You will continue at your own peril to employ the person on whose behalf I gave the guarant}',' provided that the clerk or other person has been guilty of embezzlement or gross misconduct, or has turned out to be unworthy of the confidence reposed in him b} r the persons giving that guaranty for him. If the employer under such circumstances re- fused to give the guaranty up, the person giving it would have a right to file a bill in this court, and in my opinion would succeed in the con- test, because the Court would direct the bond to be delivered up to be cancelled." And the same opinion is repeated in other parts of his judgment. It may be said that this opinion was not necessary for the decision of the case before the Vice-Chancellor, and is not, therefore, a binding authority. That may be so. but the opinion seems to us to be founded on equity and good sense, and as such we adopt it as directly 1 Law Eep. 13 Eq. 450, 458. SECT. XI.] PHILLIPS V. FOXALL. 301 applicable to the case now before us. For these reasons we think that the plea is good, and that the defendant is entitled to our judgment. 1 1 Blackburn, J., concurred, but upon somewhat different reasoning from that of the other judges. The following extract gives the gist of his opinion. " But there is a ground on which I think he may have a ground for being discharged in equity, which I will now state. A surety, as soon as his principal makes default, has a right in equity to require the creditor to use for his benefit all his remedies against the debtor ; and as a consequence, if the creditor has by any act of his deprived the surety of the benefit of anv of those remedies, the surety is discharged. The authorities for this, as far as known to me, are collected in the judgment to Bailey v. Edwards, 4 B. & S. 770; 34 L.J. (Q. B.) 41 ; and this equitable principle has, at least in the case where time has been given to the principal without the consent of the surety, been adopted to some extent at least, although whether to its full extent has been doubted. See Pooley v. Harradine, 7 E. & B. 431 ; 26 L. J. (Q. B.) 156. But it is not now material to decide that. Now the law gives the master the right to terminate the employment of a servant on his discovering that the servant is guilty of fraud. He is not bound to dismiss him, and if he elects, after knowledge of the fraud, to continue him in his service, he cannot at any subsequent time dismiss him on account of that which he has waived or condoned. This right the master may use for his own protection. If this right to terminate the em- ployment is one of those remedies which the surety has a right to require to have ex- ercised for the surety's protection, it seems to follow that, by waiving the forfeiture and continuing the employment without consulting the surety, the principal has discharged him." The doctrine of the principal case obtains generally. Saint v. Wheeler, 95 Ala. 362 ; Roberts v. Donovan. 70 Cal. 108 ; Rapp v. Phoenix Co., 1 13 HI. 390; Donnell Co. v. Jones, 66 111. Ap. 327 (semble) ; La Rose v. Logansport Bank, 102 Ind. 332 (sembJe) ; Com- mercial Co. v. Scott, 81 Ky. 540; Lake v. Thomas, 84 Md. 608 (semble); Colby Co. v. Coon (Michigan, 1898), 74 N. W. R. 519 ; Newark v. Stout, 52 N. J. 35 (semble); Enright v. Falvey, L. R. 4 Ir. 397 (but rule not applicable unless the creditor has the power of removing the principal obligor: Lawder v. Lawder, Ir. R. 7 C. L. 57 ; Byrne v. Muzio, L. R. 8 Ir. 396) ; Corporation v. McElroy, 9 Ont. 580. But see, contra, Taylor v. Bank of Kentucky, 2 J. J. Marsh. 564 ; Pittsburg Co. v. Shaeffer, 59 Pa. 350; Bank v. Tumbler Co., 172 Pa. 609, 626 (semble). Reprehensible Ignorance of Principal's Dishonesty. If the dishonesty of the principal is not known to the obligee, the surety continues liable for subsequent defaults of the principal. He cannot exonerate himself by showing gross neglect on the part of the obligee in not discovering the dishonesty of the principal. Freliughuysen v. Baldwin, 16 Fed. R. 452 ; Phillips v. Bossard, 35 Fed. R. 99 ; Planters' Bank v. Lamkin, R. M Charlt. 29; Colby Co. v. Coon (Michigan, 1898), 74 N. W. R. 519 ; Newark v. Stout, 52 N. J. 35 ; Atlas Bank v. Brownell, 9 R. I. 168 ; Enright v. Falvey, L. R. 4 Ir 397. Immorality Independent of Suretyship Transaction. Retention by the obligee of the principal after knowledge of his immorality in matters foreign to the subject-mattei of the suretyship does not release the surety. La Rose v. Logansport Bank, 102 lad. 332. — Ed. ■0 302 WATEBTOWN FIRE IXS. CO. V. SIMMONS. [CHAP. II WATERTOWN FIRE INSURANCE CO. v. G. W. SIMMONS and Others. In the Supreme Judicial Court, Massachusetts, April 6, 1881. [Reported in 131 Massachusetts Reports, 85.] Morton, J. This is an action against the defendants as sureties upon a bond given by George L. Dix, conditioned for the faithful per- formance of his duties as agent of the plaintiff, " according to the by- laws, rules, and regulations of said company." One of the by-laws of the company required that the agents should render monthly accounts, and should pay each month the balance due to the company. It appeared that Dix rendered his monthly accounts regularly, but that in December, 1877, he failed to pa} T the whole bal- ance due by him ; and that thereafter his indebtedness to the company increased from month to month until his death in March, 1879, when ne owed a balance larger than the penal sum of the bond. The plain- tiff did not notify the sureties of his default until after his death. The defendants contend that they were discharged from their liability as sureties by these facts. It is too well settled to be questioned, that the delay of the plaintiff to colleet the monthly payments due by Dix would not of itself dis- charge the sureties. Mere delay by the creditor to proceed against the debtor, unaccompanied b}* fraud or an agreement to give time, does not discharge the sureties. Hunt v. Bridgham. 1 The defendants contend that the by-law, being referred to in the bond, "amounts to a contract between the plaintiff and the sureties that the plaintiff will not knowingly permit the agent to depart from the duty there recited." The sole object of the bond was to secure the performance b} 7 Dix of his duties under the by-laws, and they are referred to only for the purpose of defining these duties. The}' cannot be construed as importing a stipulation with the sureties that the plaintiff shall cause them to be observed and kept, under the penalty of discharging the sureties. Such by-laws are directory merely, and a failure to observe them by the plaintiff or its managing officers will not discharge the sureties. Amherst Bank v. Root ; 2 Locke v. United States. 3 But the principal ground of defence is that it was the duty of the plaintiff, within a reasonable time, to notify the sureties of any default of the agent, and that the failure to do so was laches which discharged them. It may be questioned whether, if there was negligence of the other officers or agents amounting to laches, the corporation would be affected by it, as the object of the bond was to give the stockholders the double security of the supervision of its officers and the obligation of the sureties. Amherst Bank v. Root, ubi supra. But treating this 1 2 Pick. 581. 2 2 Met. 522. 8 3 Mason, 446. SECT. XI.] WA.TERTOWN FIRE INS. CO. V. SIMMONS. 30 Q case as if it were the case of an individual obligee, we are of opinion that there is no rule of law which makes it a duty which the creditor, under the circumstances of this case, owes to the surety, either to dis- miss its agent or to notify the surety of his default. If a creditor does any act which injuriously affects the situation and rights of the surety, such as giving time to the debtor, or relinquishing security which he holds for the debt, he discharges the surety either in whole ox pro tantu. But the creditor owes no duty of active diligence to take care of the interest of the surety. It is the business of the surety to see that his principal performs the duty which he has guaranteed, and not that of the creditor. Wright v. Simpson ; 1 Adams Bank v. Anthony ; 2 Taft v. Gifford; 3 Tapley v. Martin. 4 The surety is bound to inquire for himself; and cannot complain that the creditor does not notify him of the state of the accounts between him and his agent, for whom the surety is liable. Mere inaction of the creditor will not discharge the surety unless it amounts to fraud or concealment. The defendants rely upon the cases of Phillips v. Foxall, Enright v. Falvey, 5 and Sanderson /;. Aston. In the first two cases it was held that, in the case of a continuing guaranty for the honesty of a servant, if the master discovers acts of dishonesty in the servant and afterwards continues him in his service without notice to the sureties, the latter are discharged. We have no occasion to discuss these cases further than to say that the}' have no application to the case before us, because it is not contended that the agent Dix, for whom the defendants were bound, was guilty of an}' defalcations or other dishonest or fraudulent conduct. In Sanderson v. Aston, the declaration was on a bond guaranteeing that one J., a clerk of the plaintiff, should pay over all money he re- ceived on the plaintiff's account ; the plea was, that, before the defaults sued for, J. had committed other defaults of the same kind, and the plaintiff, knowing this, continued to employ him without notice to the defendant. On demurrer, this plea was held good. Chief Baron Kelly, in delivering his opinion, says, " The case of Phillips v. Foxall clearly shows that, if any defaults or breaches of duty, whether by dishonesty or not, have been committed by the employed against the employer, under such circumstances that the employer might have dismissed the employed, the surety is entitled to call on the employer to dismiss him." This decision does not seem to be sustained by Phillips v. Fox- all, which was a case of criminal embezzlement by the servant, and we are not aware of any other decisions sustaining it, at least in this country. Its effect would be to impose upon the creditors the duty of notifying the sureties whenever there are any arrears in the accounts of the agent or servant for whom the}* were bound, from whatever cause arising. We do not think that any such active duty of diligence to protect the sureties grows out of the relations of the parties, and are 1 6 Ves. 714. 2 18 Pick. 238. 3 13 Met 187. * 116 Mass. 275. MLR. Ir. 397. 304 AYATERTOWN FIRE INS. CO. V. SIMMONS. [CHAP. II. not able to agree with the decision in Sanderson v. Aston, regarding it as in conflict with the general current of authorities. This question was considered in Atlantic & Pacific Telegraph Co. v. Barnes, 1 and it was held that continuing an agent in service after a default is known, without notice to the surety, does not discharge him, no fraud or dishonesty being shown. See also McKecknie v. Ward. 2 Upon the whole case, therefore, we are of opinion that, upon the facts as stated in the bill of exceptions, the sureties were not discharged ; and that the Superior Court rightly found for the plaintiff. ^Exceptions overruled. 3 I 64 N. Y. 385. 2 58 N. Y. 541. 8 Wilkersou v. Crescent Co., 64 Ark. 80 ; Charlotte Co. v. Gow, 59 Ga. 685 ; Home Co. v. Hoi way, 55 Iowa, 571 ; Phoenix Co. v. Findley, 59 Iowa, 591 ; .ZEtna Co. v. Fowler, 108 Mich. 557; Lancashire Co. v. Callahan, 68 Minn. 277; Manchester Co. v. Redfield (Minnesota, 1897), 71 N. W. R. 709 ; Atlantic Co. v. Barnes, 64 N. Y. 385 ; Wilmington Co. v. Ling, 18 S. Ca. 116; Richmond Co. v. Kasey, 30 Grat. 218, A ccord. Knowledge of misconduct outside of subject-matter of the suretyship need not be communicated. La Rose v. Logausport Bank, 102 Ind. 332. — Ed. SECT. XII.] WARD V. HACKETT. 305 SECTION XII. Fraud or other Misconduct of Principal towards Surety. ALBERT L. WARD v. SAMUEL HACKETT and Others. In the Supreme Court, Minnesota, January 10, 1883. [Reported in 30 Minnesota Reports, 150.] Mitchell, J. 1 Defendant Elwis signed a negotiable promissory note as surety for defendant Hackett, and delivered it to Hackett, upon con- dition that he should not deliver it to plaintiff, the payee, until he pro- cured the signature of one Johnson as co-surety. Hackett failed to get Johnson's signature, but, without the knowledge or consent of Elwis, got defendant Rice to sign it, and then delivered it to plaintiff, who took it in the ordinary course of business for a valuable consideration, without any notice of the facts hereinbefore stated and now set up by way of defence. Elwis now claims that he is not liable, first, because the note was delivered without Johnson's signature, contrary to the condition upon which he signed it and left it with Hackett; second, that the addition of the name of Rice to the note, without his knowl- edge or consent, amounted to a material alteration of the instrument, which discharged him. These two questions we will consider in the order named. 1. The form of the note, when Elwis signed it and gave it to Hack- ett, was such that it was apparently complete. There was nothing on the face of the paper indicating that any other co-surety was expected to become a party to the instrument, and no fact was brought to the knowledge of the plaintiff, before he accepted the note, calculated to put him on his guard, or which should have induced inquiry. Elwis by his acts clothed Hackett with apparent authority to launch the note as it then was. The surety having thus placed the instrument, perfect on its face, in the hands of the proper person to pass it to the payee, the law justly holds that, as against the pa3 r ee who takes it in good faith, for value, without any notice of this condition, the apparent authority with which the suret}' has clothed his principal shall be regarded as the real authority, and in such case the condition shall not avail the suret}'. This is too well settled to require discussion. 2 Brandt on Suret3'ship, § 354, and cases cited. 2. The second point is more important. It has been very fully and 1 Only the opinion of the Court is given. — P^d. 2 Dair v. United States, 16 Wall. 1; Butler v. United States, 21 Wall. 272; State i>. Churchill, 48 Ark. 426; Tidhall v. Halley, 48 Cal. 610; Byers v. Gilmore (Colorado, 1897), 50 Pac. R. 370; Bonner v. Nelson, 57 Ga. 433; Clark v. Bryce, 64 Ga. 486; Mathis v. Morgan, 72 Ga. 517 (but see Crawford v. Foster, 6 Ga. 202; Cleghorn v. Robison, 8 Ga. 559; and Riley v. Johnson, 10 Ga. 414); Comstock v. Gage, 91 111. 328; 2« 306 WAKD V. HACKETT. [CHAP. IL ably argued by appellant, but, unfortunately for us, the respondent has not deemed it necessary to discuss the question at any considerable length. The position of appellant is that the fact. of Hackett's obtain- ing the name of another surety upon the note without his knowledge or consent, although done before the note was delivered to plaintiff, Rhode v. McLean, 101 111. 467; Deardorff v. Foresman, 24 Ind. 481 ; Webb v. Baird, 27 Ind. 368; State v. Pepper, 31 Ind. 76 (overruling s. c. 22 Ind. 399) ; Hunt v. State, 53 Ind. 323 ; Mowbray v. State, 88 Ind. 324 ; Carroll Co. v. Ruggles, 69 Iowa, 2G9 ; Micklewait v. Noel, 69 Iowa, 344 ; Benton Bank v. Boddicker (Iowa, 1898), 75 N. W. R. 632 ; Smith v. Moberly, 10 B. Mon. 266 ; Millett v. Parker, 2 Met. (Ky.) 608 ; Jackson v. Cooper (Kentucky, 1897), 39 S. W. R. 39 ; York Co. v. Brooks, 51 Me. 506 ; State v. Peck, 53 Me. 284; Lewiston v. Gagne, 89 Me. 395; Thomas v. Bleakie, 136 Mass. 568, 571 ; McCormick v. Bay City, 23 Mich. 457 ; Gibbs v. Johnson, 63 Mich. 671 ; Crystal Lake Tp. v. Hill, 109 Mich. 246; First Bank v. Compo-Board Co., 61 Minn. 274; Mo. Bank v. Phillips, 17 Mo. 29; State v. Potter, 63 Mo. 212 (explaining earlier Missouri cases) ; State v. Modrel, 69 Mo. 152; Wolff v. Schaeffer, 74 Mo. 154; North Atchison Bank v. Gay, 114 Mo. 203; Cutler v. Roberts, 7 Neb. 4; Owen v. Udall, 39 Neb. 14; Brumback v. German Bank, 46 Neb. 540 ; Merriam v. Rockwood, 47 N. H. 81 ; Ordinary v. Thatcher, 41 N. J. 403 (semble) ; Russell v. Freer, 56 N. Y. 67 ; Singer Co. v. Drum- mond, 40 Hun, 260; Bangs v. Bangs, 41 Hun, 41 (People v. Bostwick, 32 N. Y. 445, contra, is virtually overruled ; Grimwood v. Wilson, 31 Hun, 215, is distinguishable); Gwyn v. Patterson, 72 N. Ca. 189 ; Vass v. Riddick, 89 N. Ca. 6, 8 ; Xander v. Common- wealth, 102 Pa. 434 ; Whitaker u. Richards, 134 Pa. 191 ; Jordan v. Jordan, 10 Lea, 124 ; Dun v. Garrett, 93 Tenn. 650 ; Davis v. Gray, 61 Tex. 506 ; Ballon v. Wichita Co., 74 Tex. 339 ; McFarlane v. Howell (Texas Civil Appeals, 1897), 43 S. W. R. 315 ; CarletoH v. Cowart (Texas Civil Appeals, 1898), 45 S. W. R. 749 (semble) ; Passumpsic Bank v. Goss, 31 Vt. 315 ; Dixon v. Dixon, 31 Vt. 450; Probate Court v. St. Clair, 52 Vt. 24 ; Nash v. Fugate, 24 Grat. 202, 32 Grat. 595; Lyttle v. Cozad, 21 W. Va. 183; Belden v. Hurlbut, 94 Wis. 562 (commenting on earlier Wisconsin cases) ; Corporation v. Armstrong, 27 Up. Can. Q. B. 553, Accord. Bibb v. Reid, 3 Ala. 88 (bond) ; Robertson v. Coker, 11 Ala. 466 (bond) ; Guild v. Thomas, 54 Ala. 414 (bond) ; King v. State, 81 Ala. 92 (bond) ; Smith v. Kirkland, 81 Ala. 345 (bond); Evans v. Daughtry, 84 Ala. 68 (bond) ; Sharp v. Allgood, 100 Ala. 183 (bond), (citing earlier Alabama cases) ; Sessions v. Jones, 7 Miss. 123 (bond) (but see Graves v. Tucker, 18 Miss. 9 (bond) ; State v. Allen, 69 Miss. 508, bond), Contra. Absence of Signature of one named as Co-surety in Body of Instrument. If, however, a surety signs an obligation, and delivers it to the principal on condition that it shall not he given to the obligee until another person, whose name appears in the body of the instrument, also signs it, he will not be liable unless that other person also signs ; for the obligee, being apprised by the form of the instrument that all persons named were contemplated as parties, is treated as having constructive notice of the conditional delivery. Pawling v. United States, 4 Cranch, 219; Duncan r. United States, 7 Pet. 435; Sharp v. Algood, 100 Ala. 183; State v. Churchill, 48 Ark. 426; Allen v. Mar- aey, 65 Ind. 398 ; Markland Co. v. Kimmel, 87 Ind. 560 ; Johnson v. Weatherwax, 9 Kas. 75 {semble) ; Hall v. Smith, 14 Bush, 604 (but see Jones i\ Shelbyville Co., 1 Met. Ky. 58) ; Readfield r\ Shaver, 50 Me. 36 (semble) ; Thomas v. Bleakie, 136 Mass. 568, 571 (semble); Hessell v. Johnson, 63 Mich. 623; State Bank v. Evans, 15 N. J. 155; Ordinary v. Thatcher, 41 N. J. 403 ; State v. Lewis, 73 N. Ca. 138 (semble) ; Fertig v. Bucher, 3 Barr, 308; Whitaker v. Richards, 134 Pa. 191 (semble); Fletcher v. Austin, 11 Vt. 4+7; Ward v. Churn, 18 Grat. 801. But the absence of the signature of one named as surety creates no presumption that there was in fact a conditional delivery by the surety who signed. The latter must ad- duce satisfactory evidence of such a delivery. City v. Melius, 59 Cal. 444 ; Towns v. Kellett, 11 Ga. 286; Johnson v. Weatherwax, 9 Kas. 75 ; Readfield v. Shaver, 50 Me. 36; State v. Moore, 46 Mo. 377 ; Gay v. Murphy, 134 Mo. 98, 106 (semble) ; Mullen v. Morris, 43 Neb. 596 ; Blume v. Bowman, 2 Ired. 338 ; Williams v. Springs, 7 Ired. 384 SECT. XII.] WARD V. HACKETT. 307 amounted to a material alteration of the instrument, which discharged him, even although plaintiff had no notice of the facts when he took the note. If this be the law, we are satisfied its announcement would be a surprise to the business and commercial world. It would render com- (semble) ; Grim v. School, 51 Pa. 219 (explaining Sharp v. United States, 4 Watts, 21); Loew v. Stocker, 68 Pa. 226; Whituker v. Richards, 134 Pa. 191; Ward v. Churn, 18 Grat. 801. But see contra, Wells v. Dill, 1 Mart. n. s. 592. In a few jurisdictions the form of the instrument, coupled with proof of the con- ditional delivery's not enough to exonerate the surety in such cases. The surety must go so far as to show that the obligee had actual knowledge of the conditional delivery. Byers v. Gilmore (Colorado, 1897), 50 Pac. R. 370 (semble) ; Smith v. Board, 59 111. 412; Hart v. Mead Co. (Nebraska, 1897), 73 N. W. R. 458 (compare, however, Cutler v. Roberts, 7 Neb. 4; Mullen v. Morris, 43 Neb. 596). Absence of Signature of Principal. There is, on the other hand, a presumption that a surety who signs does not mean to be bound unless the principal also executes the in- strument. Accordingly, in the absence of the principal's signature, an obligee, who would charge tbe surety, must show that the surety in the particular case dispensed with the signature of the principal. Weir v. Mead, 101 Cal. 125 (because obligation was joint) ; Wild Cat Branch v. Ball, 45 Ind. 213 (semble) ; Clements v. Cassilly, 4 La. An. 380 ; Bean v. Parker, 17 Mass. 591 ; Wood v. Washburn, 2 Pick. 24 ; Goodyear Co. v. Bacon, 151 Mass. 460; Dole Co. v. Cosmopolitan Co., 167 Mass. 481 ; Johnston v. Kimball, 39 Mich. 187; Hall v. Parker, 39 Mich. 287, 37 Mich. 590; Re Cahill, 63 Mich. 616 (semble) ; State v. Austin, 35 Minn. 51 ; Martin v. Hornsby, 55 Minn. 187 ; Safranski v. St. Paul Co. (Minnesota, 1898), 75 N. W. R. 17 ; Bunn v. Jetmore, 70 Mo. 228; Gay v. Murphy, 134 Mo. 98; Board v. Sweeney, 1 S. Dak. 642. In some jurisdictions, however, there is no such presumption, and the surety must show that his signing and delivery were, in fact, conditional upon the execution of the instrument by the principal. Cooper v. Evans, 4 Eq. 45 ; Kurtz v. Forqueer, 94 Cal. 91 (because obligation was joint and several) ; Hickman v. Fargo, 1 Kas. Ap. 695 ; Deering v. Moore, 86 Me. 181 ; Bollman v. Pasewalk, 22 Neb. 761 ; Parker v. Bradley, 2 Hill, 584; Chouteau v. Suydam, 21 N. Y. 179 ; Dillon v. Anderson, 43 N. Y. 231 ; Russell v. Freer, 56 N. Y. 67 ; Whitford v. Laidler, 94 N. Y. 145 ; Williams v. Marshall, 42 Barb. 524 ; U'Hanlon v. Scott, 89 Hun, 44 ; Eureka Co. v. Long, 11 Wash. 161 ; Douglas Co. v. Bardon, 79 Wis. 641. In Illinois and Montana, and perhaps in Ohio, the surety, to escape liability, must show not only a signing and delivery conditional upon the execution of the instru- ment by the principal, but also that the obligee had notice of the conditional delivery. Trustees v. Sheik, 119 111. 579 ; Woodman v. Calkins, 13 Mont. 363 ; Cockriil v. Davis, 14 Mont. 131 ; State v. Bowman, 10 Ohio, 445; Johnson v. Johnson, 31 Ohio St. 131. Delivery by Principal in Violation of other Conditions. Just as the principal's failure to procure the promised signature of another party will not exon- erate the surety, so an agreement between the surety and the principal that the surety's obligation shall not be delivered to the obligee except for a special purpose, or until the happening of some event, will not defeat an innocent obligee. Gage v. Sharp, 24 Iowa, 15 ; Carter v. Moulton, 51 Kas. 9 ; Thomas v. Bleakie, 136 Mass. 568; Small v. Smith, I Den. 583 ; Fowler v. Allen, 32 S. Ca. 229 ; Merritt v. Duncan, 7 Heisk. 156; Bowman v. Van Kureu, 29 Wis. 209; Moulton v. Posten, 52 Wis. 169 (semble)-, Cross v. Currie, 5 Ont. Ap. 31. Misdelivery by a Stranger to the Obligation. If a stranger to the obliga- tion, to whom the surety has intrusted it to be delivered only in a certain contingency, delivers it in violation of his trust, the surety is nevertheless chargeable by a bona fide obligee or holder. Taylor Co. v. King, 73 Iowa, 153 (questioning Daniels v. Gower, 54 Iowa, 319, which was treated as overruled in Benton Bank v. Boddicker (Iowa, 1898), 75 N. W. R. 632) ; McCormick v. McKee, 51 Mich. 426. But see contra, Millett v. Parker, 2 Met. (Ky.) 608 (semble) ; Nash v. Fugate, 24 Grat. 202 (semble). — Ed. 308 WARD V. HACKETT [CHAI*. II. mercial paper a very uncertain and unsafe subject with which to deaL But we have carefully examined all of the numerous cases cited Irv ap- pellant, and do not find one that goes far enough to sustain him. Many of these cases hold that a material alteration of a note made by one of the promisors before its delivery, without the knowledge of the other promisor, makes the note void as against such other promisor, although the payee have no notice of the alteration when he takes the note. Such is doubtless the law. But, upon examination, these will all be found to be cases where the body of the note or the contract itself was changed, as by alteration of the date, rate of interest, or amount of the note. And the reason given wln T , in such cases, the party is discharged, is the self-evident one that the contract is no longer the one he made. Nu- merous cases are also cited to the effect that the addition of a new party to a note, without the consent of the other parties, is a material altera- tion of the instrument. But these will be found to be cases where the new name was obtained after the note was fully issued and delivered to the payee, and at his instance or with his knowledge. We have been referred to no case, and have found none, going so far as to hold, where a surety signs a promissory note and intrusts it to his principal, and the principal, while the instrument is still inchoate and has not become effectual as a contract by delivery, procures an additional signer, that this would be a material alteration and release the first surety. Two of the cases cited might, at first sight, seem to favor such a doctrine, but, upon examination, will be found not to sustain it, even if the payee knew, when he took the note, the circumstances under which the addi- tional signature was obtained. The case of Haskell v. Champion 1 was one where, at the instance of the pa}'ee, the names of new principal obligors were substituted in place of the original one, by changing the individual signature of one partner into the firm signature, thus attempting to make a party surety for per- sons for whom he had never agreed to be responsible. The case of Hall v. McHenry 2 contains dicta by some of the judges which go farther than an}* decision we have found. In that case the name of the additional surety was obtained before delivery of the note,, but at the instance and for the benefit of the payee. After the note was delivered, the payee cut off the name of this additional surety with- out the knowledge or consent of the first surety. Wright, J., who de- livered the opinion of the Court, while admitting that he had found no authority to that effect, argues that thus adding a new surety, even be- fore delivery of the note, would amount to a material alteration of the instrument, which would discharge the original surety, provided the •payee knew, when he took the note, of the circumstances under which the additional name was added. He then states that the Court was not agreed on this proposition, and then proceeds to decide the case upon another point, to wit, that cutting the additional name off the note was a material alteration, which discharged the original surety. 1 30 Mo. 136. 2 19 i owa> 521. BECT. XII.] WARD V. IIACKETT. 309 The rule that a material alteration of a contract avoids it had its origin largely in the necessity of preserving and protecting the integrity and sanctity of contracts. Properly applied, the rule is a salutary one. But the general sentiment of courts now is that the doctrine had been extended quite far enough, and that formerly, especially in England, it had been carried too far, and applied to cases not within the mischief intended to be prevented. Therefore, the tendency now is, if not to restrict, at least not to extend it beyond what has been already decided. To hold that the obtaining of an additional surety to a note, under the facts of the case at bar, amounted to an alteration of the instrument that would discharge Elwis, would in our judgment be harsh, technical, and work injustice, and establish a doctrine contrary to the general understanding of business men, which ought to be the law of such cases, and is the only just basis of the implied contract resulting from the facts. In dealing with commercial paper, complete on its face, and signed by several parties, we apprehend it never occurs to a business man that it is incumbent upon him to inquire of each maker whether he understood when he signed the paper just what other parties were to sign with him, or whether any additional names have been subsequently added without his knowledge or consent. To require any such thing would be incon- venient, without reason, and an innovation upon business usages. The idea that when a person signs a note as surety, and delivers it to his principal, no other surety is to be obtained, and, if the note cannot be negotiated in that form it cannot be used at all, unless all parties con- sent to the introduction of a new surety, is, we apprehend, contrary to the general understanding of the commercial world. It seems to us that, at least as against an innocent holder, the prin- cipal obligor, to whom the paper has been intrusted by the surety, has implied authority to obtain additional sureties, until the note is launched into the market by delivery to the payee ; and, as already remarked, this common understanding is the only just basis of an implied contract resulting from the facts. Courts have, in some cases, gone so far in holding that the addition of a new name to a note, under certain circum- stances, amounted to a material and unauthorized alteration of the in- strument, that it ma^' be difficult to state the principle which distinguishes some of these cases from the present, nor do we feel compelled to at- tempt to do so. But whether or not the reason we have suggested be the correct one, we are satisfied that neither upon principle nor author- it}- did the obtaining of Rice as additional surety amount, under the facts of this case, to an alteration of the instrument such as to release Elwis. 1 As Rice's claim to be discharged is entirely predicated upon the assumption that Elwis was released, it is unnecessary to consider it further. Order affirmed. 1 Hall v. McHenry, 19 Iowa, 521 (semble) ; Graham v. Rush, 73 Iowa, 451 ; Babcock p. Murray, 58 Minn. 385; Keith v. Goodwin, 31 Vt. 268 {semble), Accord. Stoner v. Keith Co., 48 Neb. 279, Contra. See Governor v. Lagow, 43 111. 134; Sampson v. Barnard, 98 Mass. 359. — Ed. 310 STONER V. MILLIKIN". [CHAP. IT. THOMAS J. STONER v. JAMES MILLIKIN and Others. In the Supreme Court, Illinois, January Term, 1877. [Reported in 85 Illinois Reports, 218.] Mr. Chief Justice Sheldon delivered the opinion of the Court. 1 At the February term, 1874, of the County Court of Macon County, a judgment 'was entered by confession, in favor of Millikin & Co., against Thomas Lee, John Lee, and Andrew J. Stoner, for $453.33, upon a promissoiy note with a warrant of attorney attached, purporting to be executed by the three latter, dated the 24th day of June, 1873, payable ninety days after date to H. Crea, and assigned by him with- out recourse. An execution, issued upon the judgment, was levied upon personal property of John Lee, sufficient in value to satisfy it. Afterward, by direction of Millikin & Co., the sheriff released the property of John Lee from the lev}', and levied the execution upon certain real estate of Stoner, and the bill in this case was filed by Stoner to enjoin the sale of his property under the execution. The Court below, upon final hearing on proof, dismissed the bill, and the complainant appealed. The chief ground relied upon in support of the bill is, that the signa- ture of the name of John Lee to the note is a forgery. The note is a joint and several one, the signature of Stoner being last upon the note. He testifies that Thomas Lee applied to him to sign the note as his security ; that he refused to do so unless Lee would first get his brother, John Lee, to sign the note ; that Lee went away saying he would go and get John to sign it ; that the next day he came back, saying that he had got John to sign it, and presented the note with the signature of John Lee appearing to it, and witness then signed it. supposing the signature of John Lee to be genuine, knowing him to be responsible, and had he not supposed the note to have been signed by John Lee, he would not have executed it. Thomas Lee had made the arrangement beforehand with Millikin & Co. to lend him the money. H. Crea, the payee of the note, was but nominally such, Millikin & Co. being the real pa3'ees ; and on presentment of the note, with Crea's in- dorsement on it, by Thomas Lee to Millikin & Co. , who were bankers? they discounted the note, paying the proceeds to Thomas Lee. Why should this forgery operate in discharge of Stoner, and entitle him to have his property exempted from sale on the execution? It may have been a wrong toward him, and have caused him to incur a greater extent of liability than he expected ; and the supposed obtaining of the execution of the note by John Lee may have been the sole condition upon which he signed his name to the note. Yet, on satisfactory evidence to himself, in that respect, he did place his name unconditionally to the note as a maker thereof, and left it with Thomas 1 The case is slightly abridged. — Ed. SECT. XII.] STONER V. MILLIKIN. 311 Lee to deliver to Millikin & Co., knowing that on the faith of his, Stoner's, promise to repay it, the}' would part with their money to Thomas Lee. There is no just reason why this promise to Millikin & Co. should not be kept. Whatever of wrong there was to Stoner, was perpetrated by his co-maker, Thomas Lee. Millikin & Co. were wholly innocent in the matter; they had no notice of anything which had been transpiring among the makers of the note, as between themselves. Nor was it incumbent upon Millikin & Co. to exercise care over the interest of the surety in the note, look to the inducement which led him to become such, and see that it should not fail. The}- had but to watch over their own interest, and see that the security offered was a sufficient protection for them. For the lack of the vigilance they failed to exer- cise in this respect, they suffer the full consequence in the loss of the security of the name of John Lee. Whatever of fraud and deception the co-makers of the note practised toward one another, was their own sole concern, and the consequence, so far as ma}- affect them in their relation to each other, should be borne by themselves alone. There is no justice in requiring Millikin & Co. to assume the risk of such con- duct, and no sound principle upon which they should be made to suffer loss because of it, not being privy thereto. York County M. F. Ins. Co. v. Brooks 1 and Selser v. Brock 2 are direct authorities to the point that such a forgery of the name of a prior surety will not discharge a subsequent surety. See Young et . State, 5 Wyo. 318 (Clerk of Court). — Ed. 1 The report of the case is somewhat abridged. — Ed. 22 338 CARR V. LADD. [CHAP. IL office. He had himself known a similar bond of £10,000 paid by executors, though the bond was executed twentj' years ago. " Mr. Park said he wished this might be generally known, as it would make men a little more cautious in entering into such securities. "The verdict was [then] given for the plaintiff [subject to a refer- ence on the accounts]." ' Securities given by executors, administrators, and guardians, in this State, must all stand upon the same footing with the present ; and it never was doubted that the estates of the bondsmen were liable, though the waste was committed after their death. The proper remedy against the mischiefs that have been suggested by the counsel for the defendant would be for the sureties to stipulate only for a certain time ; or to introduce a stipulation that, on notice by the surety that he would no longer be holden, the responsibility should terminate. If no such covenants are inserted, and the covenantors oblige themselves as long as the deputy remains in office, it must de- pend on the pleasure of the sheriff how long they shall be bound. Arguments from inconvenience have no place where the law is clear. The administrator must answer for defaults till the deputation given to Nathaniel Ladd was revoked. 2 Judgment for amount of penalty of the bond. Execution for dam- ages, $957.20, and costs. s 1 See Boston Gazette, Sept. 1, 1803 * 2 Sureties in a recognizance to keep the peace, it is said, are not discharged hy their death; their executors or administrators continue bound. 4 Burn, 268,269; 1 Hawk. P. C. 129 ; Dalt. c. 120; 1 Hawk. P. C. b. 1, c. 60, § 17, p. 258. 3 Gordon v. Calvert, 2 Sim. 253, 4 Buss. 581, 3 M. & By. 124 (collecting clerk) ; McCloskey v. Barr, 79 Fed. B. 408, 415-16 (semble); Bappr. Phoenix Co., 113 HI. 390 (insurance agent) ; Boyal Co. v. Davies, 40 Iowa, 469 (insurance agent) ; Green v. Young, 8 Me. 14 (deputy-sheriff) ; Shackamaxou Bank v. Yard, 143 Pa. 129, 150 Pa. 351 (cashier) ; in which cases the principal obligor held his position at the will of his employer, the obligee, Accord. To the same effect are Andrus v. Beals, 9 Cow. 693 (deputy -sheriff) ; Barnard v. Darling, 11 Wend. 28 (deputy-sheriff); in which cases the surety sought to terminate his liability for the future by a notice to that effect. But a different doctrine is suggested in Beilly v. Dodge, 131 N. Y. 153, 157 : " There are certain contracts of indemuity which may be terminated by a surety without the consent of the creditor or the principal. It was said by Pinch, J., in Emery v. Baltz (94 N. Y. 408), that ' a surety bound for the fidelity and honesty of his principal, and so for an indefinite and contingent liability, and not for a sum fixed and certain to become due, may revoke and end his future liability in either of two cases, viz. : First, where the guaranteed contract has no definite time to run ; and second, where the principal has so violated the contract, and is so in default, that the creditor may safely and lawfully terminate it for that reason.' The learned judge did not say, nor does the case hold, that the liability may be terminated by mere notice given by the surety at any time, and is not authority to sustain the proposition upon which the sureties in this case rely ; namely, that their liability was terminated on the twenty-eighth of November, the day the notice was received. " Whether a surety upon a penal bond, conditioned upon the faithful performance of * Annexed to the manuscript is a printed slip, which seems to have been cut from the " Boston Gazette," containing a report of Heaver v. Thompson, substantially the same as recited in the opinion. SECT. XIV ] FEWLASS V. KEESHAN. 339 FEWLASS and Others v. KEESHAN and Others. In the Circuit Court of Appeals, Sixth Circuit, July 5, 1898. [Reported in 88 Federal Reporter, 573.] Before Taft and Lurton, Circuit Judges, and Clark, District Judge. Taft, Circuit Judge. This is an appeal from the decree of the Circuit Court against Howard Ferris, the administrator of Samuel Cooper, deceased, and Hannah Cooper Fewlass, his sole heir and next of kin, on a cost bond entered into by Cooper shortly before he died for the amount of the costs adjudged to be due from the com- plainants in the case, most of which accrued after Cooper's decease. The bond was in the form following : — " In the Circuit Court of the Uuited States for the Southern District of Ohio. " Sarah E. McCloskey et al. v. Samuel IJarr et al. Cost bond. " I hereby acknowledge myself security' for costs in this case. " Samuel Cooper. "Taken and acknowledged before me this 15th day of September, 1887. "Robert C. Georgi, " Deputy Clerk United States Circuit Court, Southern District of Ohio." After a decree for costs was rendered against complainants in the action, the administrator and the heir and next of kin of Cooper were duly notified of the filing of a petition b} r the successful parties for a decree against them, and, after pleadings were filed raising various issues, evidence was taken, and the decree for the full amount of costs, now appealed from, was entered. his duty, by a public officer like a deputy sheriff, can terminate his liability without the consent of the sheriff or the principal in the bond, or can become discharged without any new consideration, is a point that is not necessary to decide in this case. It is en- tirely safe to hold, however, that a notice by the surety, such as was served in this case, does not operate to discharge the sureties until a reasonable time has elapsed suf- ficient to enable the sheriff to give notice to the deputy and the other sureties, and to permit a new bond to be given* The official duties of the sheriff are performed to a very great extent through deputies appointed by him, and, for his own protection, they are required upon their appointment to give bonds to him for the faithful per- formance of their duties. It would greatly embarrass the sheriff in the performance of the important and responsible duties of his office if the sureties upon the bonds of his deputies could withdraw from them and terminate their liability at will. The business in the hands of the deputies might be in such a condition when the notice of the sureties is served upon him that be might be unable to arrest their action or ter- minate their power to subject him to liability by their acts done in his name. Unless the sureties can be held by him to the liability which they assumed for at least a rea- sonable time after the notice, he may be subjected to liability of the gravest kind for the acts of others without any means of protection. That this responsibility cannot be thrown upon the sheriff by the sureties at will and upon notice merely, would seem to be clear upon principle, and is sustained by abundant authority. — Ed. * La Rose v. Logansport Bank, 102 Ind. 332, 344 (semble), Accord. 340 BRADBURY V. MORGAN. [CHAP. II. The first 1 point made in this court by the appellants is that the cost bond does not bind the estate of the surety for any costs accruing after his death. The rule as to the obligation of a grantor in respect to transactions occurring after his death is that the obligation is not affected by his death if the contract of guarantee was one from which he might not withdraw upon notice, but that, if he could have done so, then his death will be given the effect of a notice of withdrawal, at least from the time when the knowledge of the same has been brought home to the obligee. The former proposition is sustained by the cases of Lloyd v. Harper ; Calvert v. Gordon ; 2 Green v. Young ; 3 Moore v. Wallis ; 4 and Voris v. State. 5 The alternative proposition is illustrated in the cases of Jordan v. Dobbins ; Hyland v. Habich ; 6 Coulthart v. Clementson ; and Gay v. Ward. 7 A court cannot release a suretj- upon a cost bond without the consent of the party for whose benefit the secu- rity has been given. Holder v. Jones ; 8 Standard Publishing Co. v. Bartlett. 9 This feature of the obligation of a cost bond places it in the category of irrevocable guarantees, the obligations of which con- tinue according to their terms, without regard to the death of the guarantor. 10 BRADBURY and Others v. MORGAN and Another, Executors. In the Exchequer, June 4, 1862. [Reported in 1 Hurlstone §• Coltman, 249.] Declaration. That heretofore, and in the lifetime of the said J. M. Leigh, the said J. M. Leigh contracted, guaranteed, and agreed with the plaintiffs, in the guarantee hereinafter mentioned called Messrs. Bradbur}', Greatorex and Co., in the words and figures following, that is to say : — "3 George Yard, Lombard St., "London, May 3, 1858. " Messrs. Bradburj-, Greatorex and Co. " Gentlemen, "I request that you will give credit in the usual way of your business to Henry Jones Leigh, of Leather Lane, Holborn ; and in con- sideration of your doing so, I hereby engage to guarantee the regular payment of the running balance of his account with you, until I give you notice to the contrary, to the extent of one hundred pounds sterling. " I remain, &c, " Limit £100. " J. M. Leigh." 1 Onlv so much of the case is given as relates to this point. — Ed. 2 3 Man. & R. 124. 3 8 Me. 14. 4 18 Ala. 458. 6 47 Ind. 345. 6 150 Mass. 112. 7 67 Conn. 147. * 29 N. C. 191. 9 5 Wkly. Law Bui. 501. W McCloskey v. Barr, 79 Fed. R. 408, Accord. —Ed. SECT. XIV.] BRADBURY V. MORGAN. 341 And the plaintiffs accordingly from time to time credited the said II. J. Leigh in the usual way of their business ; and the running balance of the said II. J. Leigh's account with the plaintiffs afterwards, and after the death of the said J. M. Leigh, and before the plaintiffs had any notice or knowledge of such death, and before any such notice as in the said guarantee was and is made and provided had been given to the plain- tiffs amounted to a large sum, to wit, £100, and was and is due and un- paid to the plaintiffs ; and all things have been done and happened, and all times have elapsed, necessary to entitle the plaintiffs to maintain this action. Plea. — That the said running balance of the said H. J. Leigh's ac- count was and is due to the plaintiffs for goods sold and delivered by them, and credits for the same given by them in the usual way of their business, to the said H. J. Leigh, and not otherwise ; and that the said goods were sold and delivered, and the credits in respect thereof given, and the debts constituting the said balance of the said account were, and each of them was, contracted and incurred after the death of the said J. M. Leigh, and not in his lifetime. Demurrer and joinder therein. Bei'esford (with whom was Hume Williams) in support of the de- murrer. J. Brown, in support of the plea. 1 Pollock, C. B. We are all of opinion that the plaintiff is entitled tc judgment. No doubt, if this were merely an implied contract which arose from a request, it would be revoked by the death of either party. Blades v. Free 2 is an authority that a request is revoked, but a con- tract is not put an end to, by death. The language here used, " I re- quest you will give credit," is a mere mode of civil expression, and the part}' using it never meant to request in that sense which Mr. Brown has suggested. Instead of saying, "I will thank you to give credit; " or " You will oblige me by giving credit," he says, " I request you will give credit." Whether his death was contemplated, I do not know. The probability is, that if it had been suggested the plaintiffs would have required some notice before the guarantee was determined ; but this is a contract, and the question is whether it is put an end to by the death of the guarantor. There is no direct authorit}' to that effect ; and I think that all reason and authority, such as there is, are against that proposition, and that the plaintiffs are therefore entitled to judgment. Bramwell, B. I am of the same opinion. The general rule is thus stated in Williams on Executors, page 1559, 5th ed. : " The executors or administrators so completely represent their testator or intestate, with respect to the liabilities above mentioned, that every bond, or covenant, or contract of the deceased includes them, although the}' are not named in the terms of it ; for the executors or administrators of every person are implied in himself." The only exception is where the contract is in respect of the personal qualification of the testator or 1 The arguments of counsel are omitted. — Ed. a 9 B. & C. 167. 342 BRADBURY V. MORGAN. LCHAP. IL intestate, and that does not apply to the present case. If the guarantee had been in these terms : "I request you to deliver to A. to-morrow morning goods of the value of £50, and in consideration of j'our so doing I will pay you," and before the morning the guarantor died, but the goods were duly delivered ; I can see no reason why the personal representative of the guarantor should not be liable ; and whether a guarantor says, " deliver some goods on a given day," or "deliver a quantity of goods upon any day or days," can make no difference. Very likely a tradesman, who would not trust in the first instance without a guarantee, would not deliver any goods after the death of the guarantor, but, however that may be, tbe executor must give some timely notice in order to put an end to the contract. Mr. Brown relied on the words "I request you will give credit," but the}' are of no importance; for this is not a case of authority given by the deceased. With respect to the passage in Williams on Executors, p. 1604, it is certainly not supported by any authority. It is there said, if a man enters into a continuing guarantee and dies, his executor, it seems, is not liable for advances made after the testator's death, which operates as a revocation. Reference is made to Smith's Mercantile Law, p. 451, 5th ed., but not to the authorities there cited ; and if those authorities be looked at, there is no pretence for sa} - ing that they justify the propo- sition laid down in that book. Therefore it seems to me that there is no authority to prevent us from deciding in favor of the plaintiff. Channell, B. I am also of opinion that the plaintiff is entitled to judgment. Whether the parties contemplated that the contract should extend beyond the life of the guarantor, is not the question. I agree with the Lord Chief Baron that the question is whether this is a case of mere authorit} r or a contract. I am of opinion that it is a contract, and if so, it is not revoked by the death of the guarantor. A mere author- ity is determined by death, but in the case of a contract death does not in general operate as revocation, but only in exceptional cases, and this is not within them. Judgment for the plaintiffs. 1 1 Illinois Co. n. Gorton, 19 Pa. Co. E. 124, 6 Pa. D. C. 447 s. c. ; Michigan Bank v. Leavenworth, 28 Vt. 210, Contra. In Offord v. Davies, 12 C. B. n. s. 748, and Conduitt v. Ryan, 3 Indiana Ap. 1, a promise similar to that in the principal case was held to be without legal effect from the time notice of revocation of the offer was given to the offeree. But if the plaintiff, acting in reliance upon the defendant's letter of credit, has promised to honor bills to be drawn upon him by A, he may exact reimbursement from the defendant for accept- ances of A's bills although made after notice from the defendant of the revocation of his letter of credit, if the bills accepted were drawn before the plaintiff had time to notify A to draw no more bills upon him. Gelpcke v. Quentell, 74 N. Y. 599. — Ed. SECT. XIV.] COULTIIAKT V. CLEMENTSON. 343 COULTIIART v. CLEMENTSON and Another. In the Queen's Bench Division, December 9, 1879. [Reported in 5 Queen's Bench Division, 42.] The following judgment was delivered : — Bowen, J. This is an action brought by a bank upon a continuing guarantee against the executor of a deceased guarantor. Messrs. E. & J. Clementson, cotton-brokers and spinners in the county of Chester, had a banking account with the bank of which the plaintiff is the registered public officer. In the year 1867 the bank re- quired security for the advances which were likely to be made to Messrs. E. & J. Clementson, and on the 24th of August, 1867, a written guar- antee was executed by Nathaniel Lawton, the deceased, and the defendant Joseph M. Clementson, who is now Nathaniel Lawton's executor (and sued as such). The material part of the guarantee is as follows : — " We the undersigned, Joseph Moxom Clementson, of Dukinfield, in the county of Chester, cotton-spinner, and Nathaniel Lawton, of Micklehurst, flannel manufacturer, do hereby jointly and severally un- dertake and agree to guarantee to the proprietors of or partners in the said banking co-partnership for the time being the due and punctual pa}'ment when required of all such sums of mone}" as may have been, or may be from time to time, advanced or paid b} r or from the said banking co-partnership, or which the same co-partnership may have already paid, or become liable to pay, or may hereafter pay or become liable to pa}' for or on account of the said Edward and John Clement- son, or their order, on any account whatsoever, with interest, commis- sion, and other banking charges upon such sums. . . . And we jointly and severalty further agree as follows, namely, that this guarantee or engagement shall be considered a continuing guarantee, and shall not be withdrawn, but shall continue in full force until three months after notice to the manager of the said banking co-partnership in Ashton- under-Lyne in writing under our hands of our intention to discontinue or determine the same." Advances were duly made by the bank under this guarantee down to the death of the testator, Nathaniel Lawton, on the 19th of December, 1875, at which date the firm of Messrs. E. & J. Clementson were con- siderably indebted to the bank. It was admitted, however, that suffi- cient sums of money after notice of the death had been paid into the account, and generally appropriated to the current account, to cover any balance which was in fact owing at the date either of the death or of such notice. Upon the other hand, if the guarantee was not deter- mined in law by death or notice of the death of the testator, it was ad- mitted that the bank, who continued their advances up to May, 1878, to the firm of E. & J. Clementson, were entitled to recover under this 344 COULTHART V. CLEMENTSON. [CHAP. H. guarantee a large sum of £3,000 or thereabouts, which, in case of difference, is to be settled hereafter by a referee. The cause was tried before myself and a special jury at Liverpool, when it was agreed that the jury should he discharged, and that the court should have power to draw all reasonable inferences of fact. The evidence as to what had passed between the bank and the defend- ant as Nathaniel Lawton's executor after Nathaniel Lawton's death is not very clear. From a feeling of mutual courtesy the parties refrained from cross-examination of one another at the trial. It appeared that the bank knew of the death of Mr. Lawton, but had received no written notice of it addressed specially to themselves. On the 12th of February, 1876, however, the defendant as executor had published in the proper newspapers advertisements under 22 & 23 Vict. c. 35, requiring the creditors of the deceased Nathaniel Lawton to send in particulars of claims to the solicitors of the executors on or before the 14th of May, 1876. The bank and their officers were cognizant of this advertisement, as well as of Nathaniel Lawton's death. Under the testator's will one-third of his estate was to be in trust for the children of the testator's sister Sarah who should attain twenty-one years in equal shares, one-third for the children of his deceased brother John Lawton who should attain twenty-one, and the remaining one-third to the brother of the testator, M. H. Lawton. Some of the children were minors. M. H. Lawton, before any claim made by the bank, got his share and spent it. It was admitted that the bank knew who were the executors, and that, without knowing the terms of the will, the bank knew that the estate was going, one-third of it to the testator's brother, and two- thirds to the children of the testator's brother and sister, some of whom were infants. The defendant, who was a brother of the partners in the guaranteed firm, Messrs. E. & J. Clementson, had become liable to the bank as a guarantor jointby and severally with Nathaniel Lawton under the guar- antee in question. He called at the bank shortly after the appearance of the advertisements, and saw the manager, Mr. Coulthart. The fol- lowing is the account given by the defendant of the interview : "I went to the bank to see if they could advance some money on a large public building, the Conservative Hall, and Mr. Coulthart agreed to do so. Then he said, 'I see b} T the notice in the paper that your brother-in-law is dead. Do }"ou know that 3'ou are responsible for £3,000 ? ' and I was not aware of it, but was quite agreeable to be so, knowing my brother to be in good circumstances. He asked me how they were doing. I told him I knew all their affairs, and told him they were doing as well as they could be doing at the time. That is all that passed to the best of my recollection. We should never have paid the share out if we had thought it was subject to liability." The defendant was not cross-examined, but it was stated on behalf of the bank that Mr. Coulthart's recollection of the conversation differed SECT. XIV.J COULTHART V. CLEMENTSON. 345 from the defendant's, and by consent a written memorandum of the in- terview made b} 1 Mr. Coulthart at the time was put in as containing the substance of the evidence which Mr. Coulthart was prepared to give, and was to be taken as if he had actually deposed to it. The memorandum was as follows : — "Mr. Clementson called, and said he would sign a new letter of guarantee for £4,000 or allow the existing ones to continue, as might be most agreeable to the directors." In May, 1878, the guarantee firm, Messrs. E. & J. Clementson, fell, as I have stated, into difficulties. The bank to whom they were in- debted heavily for advances, exceeding the amount of the guarantee, claimed under the guarantee to be repaid the same by the defendant as executor of the testator, and brought this action. For the defendant it was contended that the testator's estate was not liable for any advances made after the testator's death, or, at all events, after the bank received notice of his death. For the bank it was argued that no notice was given which was equivalent to a notice of the with- drawal of the guarantee, and that the proper inference to be drawn from these facts was that the bank had a right to and did still suppose that the guarantee was to continue. If it were established that, after the death of the testator the parties had dealt together on the footing that the guarantee was at an end, the case of Harris v. Fawcett 1 would apply, and the bank would not be liable. But I do not decide this case on that ground, though I am not convinced, on the present materials alone, that the bank [defend- ants?] may not, after the testator's death, have been looking to the defendant's liability as joint and several guarantor on the guarantee, and have considered the guarantee determined as regards the testator and his estate. It is possible, on the other hand, that the executor himself supposed the guarantee to be at an end, while the bank entertained no definite opinion on the subject. It would be difficult for me to express any clear view about the matter, as the evidence leaves me still in some doubt about it. It is not necessary, if my judgment be well founded, to decide the point. I am of opinion that the notice with which the bank in the present case was affected amounted to a discontinuance, so far as future ad- vances were concerned, of the guarantee. -A guarantee like the present is not a mere mandate or authority revoked ipso facto by the death of the guarantor. It is a contract, and the question from what time and on what notice it ceases to cover advances is a question of construction of the contract itself. In the case of such continuing guarantees as the present, it has long been understood that they are liable, in the absence of anything in the guarantee to the contrary, to be withdrawn on notice. Various explanations have been offered of this reasonable, though im * Law Rep. 15 Eq. 311 ; 8 Ch. 866. 346 COULTHART V. CLEMENTSON. [CHAP. II. plied, limitation. The guarantee, it has been said, is divisible as to each advance, and ripens as to each advance into an irrevocable prom- ise or guarantee only when the advance is made. This explanation has received the sanction of the Court of Common Pleas in the case of Of- ford v. Davies. 1 Whether the explanation be the true one or not, it is now established by authority that such continuing guarantees can be withdrawn on notice during the lifetime of the guarantor, and a limita- tion to that effect must be read, so to speak, into the contract. But what is to happen on his death? Is the guarantee irrevocable and to go on forever? It would be absurd to refuse to read into the lines of the contract in order to protect the dead man's estate a limitation which is read into it to protect him while he is alive. On the argument of the present case it was virtually conceded that the provision as to three months' notice relating only to the guarantor's life, and there being no corresponding provision as to the notice to be given on his death, the guarantee could be legally determined at any time after the guarantor's death by a proper notice to that effect. But there remains the ques- tion what is the proper notice to be given. To answer this question we must consider the change which the guarantor's death has effected in the situation. The notice cannot any longer be given by the guaran- tor. He is dead. The executor of his will is guardian of his estate, and if notice is to be given by any one, the executor would seem the person to give it. But must the executor give special notice that the guarantee is withdrawn ; or is it not enough that the bank should be warned of the death of the testator and the devolution of his estate to others? In many cases the executor has no option to elect to continue the guaran- tee. Surely it would in such cases be idle to insist on special forms of withdrawal of a guarantee which nobody has a right to continue. Notice of the death and of the existence of a will is notice of the exist- ence of trusts which may be incompatible with the continuance of the guarantee. If, indeed, under the testator's will, the executor has the option of continuing the guarantee, then from the absence of any spe- cific notice of withdrawal, the bank may, perhaps, in spite of notice of the death, properly assume, as against the estate, that the guarantee is not to be determined. But if the executor has no option of the sort, then, in my opinion, the notice of the death of the testator and of the existence of a will is constructive notice of the determination as to future advances of the guarantee. The bank from that moment are aware that the person who could during his lifetime have discontinued the guarantee by notice cannot any longer be a giver of notices ; that his estate has passed to others who have trusts to fulfil, and it is easy for them to ascertain what those trusts are. If these trusts do not enable the executor to continue the guarantee, then the bank has con- structive notice that the guarantee is withdrawn. If, indeed, the con- tracting parties desire that on the death of the guarantor a special notice - 12 C. B. (n. s.) 748 ; 31 L. J. (n. s.) (C. P.), 319. SECT. XIV.] JORDAN V. DOBBINS. 347 shall be necessary to determine the guarantee, they can so provide in the guarantee itself; and such a provision will, of course, bind the estate. 1 Here there is no such provision. Judgment will, therefore, be entered for the defendants, with costs. Judgment for the defendants.* E. D. JORDAN and Others v. E. DOBBINS, Administratrix. In the Supreme Judicial Court, Massachusetts, March 1, 1877. [Reported in 122 Massachusetts Reports, 168.] Contract upon the following guarantee: " For value received, the receipt whereof is hereby acknowledged, the undersigned does hereby guarantee to Jordan, Marsh & Co. the prompt payment by George E. Moore to Jordan, Marsh & Co., at maturity, of all sums of money and debts which he may hereafter owe Jordan, Marsh & Co. for merchan- dise, which they ma} r from time to time sell to him, whether such debts be on book account, by note, draft, or otherwise, and also any and all renewals of any such debt. The undersigned shall not be compelled to pay on this guarantee a sum exceeding $1,000, but this guarantee shall be a continuing guarantee, and apply to and be available to said Jordan, Marsh & Co., for all sales of merchandise they ma} 7 make to said George E. Moore until written notice shall have been given by the undersigned to said Jordan, Marsh & Co. and received by them, that it shall not apply to future purchases. Notice of the acceptance of this guarantee and of sales under the same, and demand upon said George E. Moore for payment, and notice to me of non-payment, is hereby waived. In witness whereof I, the undersigned, have hereunto set my hand and 1 In In re Silvester, '95, 1 Ch. 573, the parties did so provide, and it was accordingly adjudged that the estate of a deceased surety continued liable on a bond to secure the repayment of successive advances, although the advances were made after knowledge of the surety's death. Romer, J., said, p. 576 : " I think that on such a contract as this the plaintiffs were entitled to rely on the express provisions of the contract with them, and were not bound to take the notice of the obligor's death as a notice from his exe- cutors to determine the liability. The proviso freed the plaintiffs from being bound by any implied notice of or being bound to make inquiry as to whether there would be any breach of trust on the part of the executors in not giving notice to determine the liability." See also Hecht v. Weaver, 34 Fed. R. Ill .^ — Ed. 2 Harris v. Fawcett, 15 Eq. 311, 8 Ch. 866 (semble) ; In re Whelau, '97, Ir. 1 Ch. 575 ; Menard v. Scudder, 7 La. An. 385, Accord. In Lloyds v. Harper, 16 Ch. Div. 290, Lush, L. J., said, p. 320 : " I cannot entertain a doubt that the judgment of Mr. Justice Bowen in Conlthart v. Clementson is per- fectly right, that notice of the death of the guarantor is a notice to terminate the guarantee, and has the same effect as a notice given in the lifetime of the guarantor that he would put an end to it." But in the same case Cotton, L. J., said, p. 318 : " It may in such a case be, although I give no opinion upon it, that death and notice of death are sufficient to determine a guarantee as regards subsequent advances." — Ed. 348 JORDAN v. DOBBINS. [CHAP. II. seal this twenty- eighth day of Februaiy, a. d. 1873. William Dobbins. (Seal.)" Annexed to the declaration was an account of goods sold to Moore. The case was submitted to the Superior Court, and, after judgment for the plaintiffs, to this court, on appeal, on an agreed statement of facts in substance as follows : — The plaintiffs are partners under the firm name of Jordan, Marsh & Co., and the defendant is the duly appointed administratrix of the estate of William Dobbins. William Dobbins, on February 28, 1873, executed and delivered to the plaintiffs the above written contract of guarantee. The plaintiffs thereafter, relying on this contract, sold to said Moore the goods mentioned in the account annexed to the declaration, at the times and for the prices given in said account, all of the goods having been sold and delivered to Moore between January 16 and May 28, 1874. All the amounts claimed were due from Moore, and payment was duly de- manded of him and of the defendant before the date of the writ. Other goods had been sold bj T the plaintiffs to Moore between the date of the guarantee and the first date mentioned in the account, but these had been paid for. William Dobbins died on August 6th, 1873, and the defendant was appointed administratrix of his estate on September 2, 1873. The plaintiffs had no notice of his death until after the last of the goods mentioned in the account had been sold to Moore. If upon these facts the defendant was liable, judgment was to be entered for the plaintiffs for the amount claimed ; otherwise, judgment for the defendant. M. Storey, for the plaintiffs. D. S. Richardson & G. F. Richardson, for the defendant. Morton, J. An agreement to guarantee the payment b} r another of goods to be sold in the future, not founded upon any present considera- tion passing to the guarantor, is a contract of a peculiar character. Until it is acted upon, it imposes no obligation and creates no liability of the guarantor. After it is acted upon, the sale of the goods upon the credit of the guarantee is the only consideration for the conditional promise of the guarantor to pay for them. The agreement which the guarantor makes with the person receiving the guarantee is not that I now become liable to 3'ou for anything, but that if you sell goods to a third person, I will then become liable to pay for them if such third person does not. It is of the nature of an authorit}' to sell goods upon the credit of the guarantor, rather than of a contract which cannot be rescinded except by mutual consent. Thus such a guarantee is revocable b} r the guarantor at any time before it is acted upon. In Offord v. Davies, 1 the guarantee was of the due payment for the space of twelve months of bills to be discounted, and the court held i 12 C. B. (n. s.) 748. SECT. XI V.J JORDAN V. DOBBINS. 349 that the guarantor might revoke it at any time within the twelve months, and that the plaintiff could not recover for bills discounted after such revocation. The ground of the decision was that the defendant's promise b}* itself created no obligation, but was in the nature of a proposal which might be revoked at any time before it was acted on. Such being the nature of a guarantee, we are of opinion that the death of the guarantor operates us a revocation of it, and that the person hold- ing it cannot recover against his executor or administrator for goods sold after the death. Death terminates the power of the deceased to act, and revokes any authority or license he may have given, if it ha3 not been executed or acted upon. His estate is held upon any contract upon which a liability exists at the time of his death, although it may depend upon future contingencies. But it is not held for a liability which is created after his death, by the exercise of a power or authority which he might at any time revoke. Applying these principles to the case at bar, it follows that the de- fendant is entitled to judgment. The guarantee is carefully drawn, but it is in its nature nothing more than a simple guarantee for a proposed sale of goods. The provision, that it shall continue until written notice is given by the guarantor that it shall not apply to future purchases, affects the mode in which the guarantor might exercise his right to re- voke it, but it cannot prevent its revocation by his death. The fact that the instrument is under seal cannot change its nature or construction. No liability existed under it against the guarantor at the time of his death, but the goods for which the plaintiffs seek to recover were all sold afterwards. We are not impressed b\' the plaintiffs' argument that it is inequitable to throw the loss upon them. It is no hardship to require traders, whose business it is to deal in goods, to exercise diligence so far as to ascertain whether a person upon whose credit they are selling is living. The decision in Bradbury v. Morgan, upon which the plaintiffs reby, was rested upon reasoning which appears to us to be unsatisfactory and inconsistent with the opinion of the same court a year before, in Westhead v. Sproson, 1 and with the decision in Offord v. Davies, ubi supra, at the argument of which Bradbury v. Morgan was cited ; and it has not since been treated as settling the law in England. Harris v. Fawcett. 2 The reasons of the similar decision in Bank of South Carolina v. Knotts, 8 are open to the same objections. Judgment for the defendant. l >6H. &N. 728. 2 l. R. 15 Eq. 311,8 Ch. 866. 3 10 Rich. 543. * Hyland v. Habich, 150 Mass. 112 (semble), Accord. Gay v. Ward, 67 Conn. 147, 156; Rapp v. Phoenix Co., 113 HI. 390, 400-401, Contra. See also Shackamaxon Bank v. Yard, 143 Pa. 129, 137. —Ed. 350 NATIONAL EAGLE BANK V. HUNT. [CHAP. II. NATIONAL EAGLE BANK v. H. A. HUNT, Administrator. In the Supreme Court, Rhode Island, February 11, 1886. [Reported in 16 Rhode Island Reports, 148.] Covenant. On demurrers to the pleas. February 11, 1888. Matteson, J. This is an action of covenant upon two sealed instruments, made, executed, and delivered to the plaintiff by Sturgis P. Carpenter, the defendant's intestate. The first 1 count in the declaration sets forth that on the 25th day of November, 1882, the said Sturgis P. Carpenter, by his certain deed- poll, or agreement in writing of that date, made and signed by him and sealed with his seal, after reciting therein that said plaintiff had there- tofore at his request discounted trade or business paper for his son, Clarence H. Carpenter, and might from time to time thereafter dis- count trade or business paper for said Clarence, or for his son, Frank F. Carpenter, guaranteed to said plaintiff the payment as and when it matured of all such trade or business paper of said Clarence or of said Frank that had been or might be discounted by the plaintiff, until such time as he, said Sturgis, should notify the plaintiff of his intention to terminate said guaranty, and therebj- waived demand and notice of non- payment thereof; that said Sturgis never notified the plaintiff of his intention to terminate said guarantee, and that afterwards, on the 31st day of March, 1884, the plaintiff, upon the faith of and relying upon said guarantee, discounted for said Clarence his, said Clarence's, note of that date for $2,500, payable four months after date at bank, to the order of said Sturgis, which note had theretofore been indorsed by said Sturgis, and paid over to said Clarence the net proceeds of the discount of said note ; that afterwards, when said note became due and payable, to wit, on the 2d day of August, 1884, payment of it was demanded at bank, but the said Clarence did not pay and never has paid it or any part of it ; of all which the defendant had due notice, and thereby became liable to pay the plaintiff the amount of said note on demand. The defendant's third, fourth, and fifth pleas set forth in varying terms, in substance, that prior to the maturit}' of said note the said Sturgis P. Carpenter died ; that the plaintiff had full notice of his death at the time of his decease, and that said guarantee was thereby termi- nated and revoked as to all subsequent transactions. To these pleas the plaintiff has demurred. Guarantees have been divided into two classes : one where the con- sideration is entire, that is, where it passes wholly at one time ; the other, where it passes at different times, and is, therefore, separable or divisible. The former are not revocable by the guarantor, and are not terminated by his death and notice of that fact. Calvert v. Gordon,* 1 Only so much of the opinion is given as relates to this count. — Ed. a 3 Man. & Ry. 124, 128. SECT. XIV.] NATIONAL EAGLE BANK V. HUNT. 351 Green v. Young 5 1 Moore v. Wallis ; 2 Royal Insurance Co. v. Davies ; 8 Lloyds v. Harper ; Rapp v. Phoenix Insurance Co. 4 The latter, on the contrary, may be revoked as to subsequent transactions by the guaran- tor, upon notice to that effect, and are determined by his death and notice of that event. Offord v. Davies ; 5 Jordan v. Dobbins ; Coulthart v. Clementson ; Rapp v. Phoenix Insurance Co. ; Menard v. Scudder. 6 The distinction between these two classes of guarantees is well illus- trated by Lush, Lord Justice, in Lloyds v. Harper. " An instance of the first," he remarks, " is where a person enters into a guarantee that, in consideration of the lessor granting a lease to a third person, he will be answerable for the performance of the covenants. The moment the lease is granted there is nothing more for the lessor to do, and such a guarantee as that of necessity runs on throughout the dura- tion of the lease. The lease was intended to be a guaranteed lease, and it is impossible to say that the guarantor could put an end to the guarantee at his pleasure, or that it could be put an end to by his death, contrary to the manifest intention of the parties. Another illustration of it is found in . . . Calvert v. Gordon, 7 which is one of a precisely similar kind. There the defendant, in consideration that the plaintiff would take into his service a given individual as collector and clerk in a responsible position, guaranteed that he would be an- swerable for his fidelity as long as he continued in that service. It was held, and, as I think, rightly, b}* the Court of Queen's Bench, that that guarantee could not be put an end to as long as the service con- tinued. The consideration there was, admitting the young man into the service of the plaintiff in that capacity, and, that being done, it was to be a guaranteed service as long as he remained there. The guarantee, therefore, necessarily continued until the service ended. " Instances of the second class are more familiar. They are where a guarantee is given to secure the balance of a running account at a banker's, or the balance of a money account for goods supplied. There the consideration is supplied from time to time, and it is reasonable to hold, unless the guarantee stipulates to the contrary, that the guarantor may at any time terminate the guarantee. He remains answerable for all the advances made or all the goods supplied upon his guarantee be- fore the notice to determine it is given ; but at any time he may saj', ' I put a stop to this ; I do not intend to be answerable an}* longer ; therefore do not make any more advances or supply any more goods upon my guarantee.' As at present advised, I think it quite competent for a person to do that when, as I have said, the guarantee is for ad- vances to be made or goods to be supplied, and where nothing is said in the guarantee about how long it is to endure. 8 In that case, as 1 8 Me. H, 15, 16. 2 8 Ala. 458, 463. 3 40 Iowa, 469, 471. * 113 111. 390, 394,395. 5 12 C. B. N. S. 748, 756, 757. 6 7 La. Ann. 385, 391, 392. 1 3 Man. & Ry. 124. 8 Jeudevine v. Rose, 36 Mich. 54, Accord. — Ed. 352 NATIONAL EAGLE BANK V. HUNT. [CHAP. IL at present advised, I cannot entertain a doubt that the judgment of Mr. Justice Bowen, in Coulthart v. Clementson, is perfectly right, that notice of the death of the guarantor is a notice to terminate the guar- antee, and has the same effect as a notice given in the lifetime of the guarantor that he would put an end to it." The only case in which a different doctrine from that above expressed with reference to the second class of guarantees has been held is Brad- bury v. Morgan. In that case, however, as remarked by Lord Komilly in Harris v. Fawcett, 1 the plea did not aver that the plaintiffs had notice of the death of the guarantor before they supplied the goods, although the court did not base its decision upon the want of such notice. The authority of Bradbury v. Morgan has, however, been ques- tioned ; Harris v. Fawcett ; and was not regarded in Coulthart v. Clem- entson, a later case, in which a contrary decision was made. The guarantees in the case at bar come within the second class above considered. They were, therefore, upon the authorities cited, termi- nated b} r the death of the guarantor and notice of it to the plaintiff, as to all subsequent transactions. 2 As, however, the note described in the declaration had been discounted, and the net proceeds had been paid to the maker prior to the death of the guarantor, the plaintiff would have been entitled to recover but for the fact, set up in the pleas, that after notice of the death of the guarantor it extended the time of pa} - ment for a further period by taking a new note from the principal debtor and receiving the interest thereon in advance, without the consent of the defendant, and without any reservation of his right assented to by the principal, to insist upon immediate paj'ment by the principal, and, in default of such payment, to pay the debt himself, and proceed at once against the principal. That such action on the part of the plaintiff was sufficient to release the estate of the guarantor, and the defendant as his representative, from liabibty, is too well established to need the citation of authority. Demurrers overruled. *■ L. R. 15 Eq. 311,313. 2 Gay r. Ward, 67 Conn. 147; Slagle v. Anderson, 1 Mona. (Pa.) 30; Kernochan t. Murray, 111 N. Y. 306, 309, Accord. See Hecht v. Weaver, 34 Fed. R. 111. — Ed. SECT, XIV.J BECKETT V. ADDYMAN. 353 BECKETT & CO. v. ADDYMAN. In the Court of Appeal, July 3, 1882. [Reported in 9 Queen's Bench Division, 783.] TnE plaintiffs sued to recover a sum of £250, the limit of a joint and several continuing guarantee, in the form of a bond, by the de- fendant and another surety, named Wright, for advances by the plain- tiffs as bankers to Grayson and Hardisty, who had an account with them. Wright, the defendant's co-surety, died on the 22d of March, 1872, and both the plaintiffs and defendant had notice of the death at the same time. The plaintiffs continued the account after Wright's death, and made further advances to Grayson and Hardisty, and there being a larger balance due on the account to the plaintiffs than the limit of £250, it was to recover the latter sum that the action was brought. The statement of defence alleged circumstances connected with Wright's testamentary dispositions calculated to bring the case within the authority of the recent decision of Coulthart v. Clementson, and to this statement of defence the plaintiffs demurred. 1 Lord Coleridge, C. J. The defendant is clearly liable upon the terms of the instrument, at least by the principles of the common law, but it is contended that there is some principle whereby the per- sons guaranteed who have done nothing are not entitled to sue upon the bond of which the defendant was obligor ; for the other person who as a surety became obligor is now dead. It is said that some ground for relief exists in equit}-, and cases in equity may be cited in which it has been decided that relief ought to be granted, because the creditors had done some act behind the back of the surety. But no ground like that exists in the present case. I think it must be taken that by the terms of the bond the death of one of the sureties was to some extent contemplated, and that it was not intended to discharge the other. It is probable that the defendant could have teiminated his liability by notice ; for it seems to be clear that in the case of a continuing guarantee for goods to be supplied or money to be ad- vanced, it is in the power of the guai-antor to determine his liability ; but if the surety takes no steps he remains liable. In the present case it is plain that the creditors can recover on the bond. The judgment of the court below must be affirmed. Brett, L. J. This bond must be construed as a joint and several obligation. At common law it must be deemed to consist of separate deeds, and the defendant is prima facie separately liable. What are 1 The statement of the case is taken from the opinion of Field, J., in the Queen's Bench Division. — Ed. 23 354 BECKETT V. ADDYMAN. [CHAP. IL the defendant's rights at law against the plaintiffs, and what are the plaintiffs' rights against him ? The defendant might have given notice to determine his liability ; but no notice has ever been given. At law the defendant is clearly liable until he has given notice. Then, has the defendant any relief in equity? The cases cited during the argument do not show that airy equity exists in his favor. It has been contended that the defendant would have an equity against his co-obligor. That may be true, but it does not follow that the liability to the obligees of the bond would likewise determine. It has been argued that the liability of the estate of the co-obligor Las determined, and therefore that the liability of the defendant is at an end. I will not now decide whether the estate of the co-obligor is liable ; but assuredly the deter- mination of that liability can in no case discharge the defendant. To hold that the defendant is discharged under the circumstances dis- closed in the pleadings would be tantamount to striking out the obliga- tion contained in the bond. I can see no equity against the plaintiffs. As they have done nothing, no equity exists against them, and they ma}* recover upon their legal right. Cotton, L. J. At law the defendant is clearly liable. But it is contended that, as the plaintiffs had notice of the co-obligor's will and of the appointment of the executors, the defendant is discharged. It is doubtful whether mere notice of the death and of the will could put an end to the liability of the estate ; but I will assume that it did. How can that circumstance alter the position of the co-surety? If the creditor deprives the surety of his rights, that may put an end to his liability ; but here the plaintiffs have done no act to discharge the defendant ; in my opinion the defendant has no equity against the plaintiffs. The decision in the Queen's Bench Division was right. Judgment affirmed. 1 1 In Ashby v. Day, 34 W. R. 312, the Court of Appeal expressly refrained from giv- ing a decision as to whether the death of one joint guarantor (not joint and several) ipso facto determined the guarantee. Bacon, V. C, had expressed the opinion in the Chancery Division that the liability of the survivor was not affected by the death of his co-guarantor. The guarantee in this case was not under seal, but this fact seems not to have influenced the judges. In Fennell v. McGuire, 21 Up. Can. C. P. 134, two persons gave a joint (not joint and several) parol guarantee, that is, a joint offer of pay- ment for goods that A. should from time to time sell to B. Goods were sold by A. to B. after the death of one of the joint offerors. The other was nevertheless held liable as a guarantor — Ed. SECT. XIV.] HUNT V. ROBERTS. 355 L. K. HUNT and Another, Respondents, v. E. ROBERTS, Appellant. In the Court of Appeals, June, 1871. [Reported in 45 New York Reports, 691. J Rapallo, J. 1 By a contract dated August 12, 1861, the plaintiffs agreed with Crossley to do the carpenters' work on the houses for the sum of $2,625, and to complete the work on or before the 15th of October, 1861 ; Crossley was to furnish the materials. The defendant guaranteed the fulfilment of the contract on the part of Crossley. The work was not finished on the 15th of October, and between that day and the 1st of November the defendant gave notice to the plain- tiffs that if the\ T did not complete the work before the 1st of November, 1861, he would not be responsible as' guarantor after that day. The plaintiffs, nevertheless, went on with the work until June, 1862, and have recovered in this action the contract price of the work up to that time. It appears from the findings of the referee, that the delay in com- pleting the work was owing to the fault of Crossle}' in furnishing the materials and preparing the houses. And, further, that the defendant had, under a contract with Henry Day, the owner of the lots, assumed the obligations of Crossley in those respects, so that the default was in fact that of the defendant. What the arrangements were between Crossley and the defendant does not appear. The defence cannot be sustained on the ground of any breach of the contract on the part of the plaintiffs, but rests wholly upon the effect of the defendant's notice that he would not be bound as guarantor after the 1st of November. By the terms of the original contract, the work was to have been completed on the 15th of October. If not performed at this time, the defendant, had he not interfered in the transaction, or consented to an extension of the time, would have been entitled to have the matter closed. If the delay had been owing to the default of the plaintiffs, the defendant would have been discharged. If it was caused by Cross- ley, he had been guilty of a breach, and the defendant would have been entitled to insist upon the contract being terminated, and, on such ter- mination, would have been liable as guarantor for the work done up to that time, and for the damages sustained by the plaintiffs in not being allowed to complete the job. The effect of the notice was to extend the time for completion, as far as the guarantee was concerned, to the 1st of November. We think that the extension left the parties in the same position on the 1st of November in which they would otherwise have been on the 15th of 1 Only the opinion of the court is given, and that too somewhat abridged. — Ed. 356 HUNT V. ROBERTS. [CHAP. II. October, and that it did not operate as an extension of the guarantee indefinitely to such time as might be necessary to complete the work, but that the defendant had the right to insist that his liability, as guar- antor, should be limited to the debt and damages which the plaintiff's were entitled to claim as of the date specified in his notice. If the defence rested upon the allegation, that the plaintiffs had failed to perform their part of the contract, or that the contract had been varied, the facts found by the referee would have been abundant answers to those defences. But such is not the nature of the defence. It is, that after the contract had been broken, the defendant, in his character of suret}-, insisted that the plaintiffs should not go on and add to his liability as guarantor, but that, if they continued, they should look to the principal alone for all work done after that time. If they did not think proper to continue on those terms, the}' should have stopped work, and would have been entitled to recover of the defendant what they had earned up to that time and their damages for not being allowed to complete the job. The learned referee, in substance, denied all effect to the notice given by the defendant, and seems to have held that he could not thereby fix the time as of which the amount of his liability should be ascertained. There is authority for the proposition, that a suret\* cannot, before breach, by his own act terminate a subsisting suretyship for a third person, so as to exempt himself from liability for future defaults of his principal, Hough v. Warr ; 1 Calvert v. Gordon ; 2 Gordon v. Calvert ; 3 Calvert v. Gordon ; 4 although an agreement to guarantee obligations to be incurred ma} T be revoked before it is acted upon. (Offord v. Davies ; 5 Agawam Bank v. Strever. 6 ) Without now determining how far a surety can, before a breach of the engagement of his principal, protect himself from future, defaults, we are clearly of opinion that, after a breach which will justify a termination of the contract, the surety has the right to require that the contract with the principal be terminated, and the claim against the surety confined to the damages then recoverable. Judgment reversed and new trial ordered, costs to abide the event.'' 1 1 Car. & P. 151. - 1 M. & Ry. 497; s. c. 7 B. & C. 809. 3 2 Sim. 253 ; B.C. 4 Buss. 581. * 3 M. & Ry. 124. » 31 L. I. C. B. 319. 6 18 N. Y. 513, 514. * Dwelling Co. v. Johnston, 90 Mich. 170, Accord. — Ed. SECT. L] GODDARD V. WHYTE. 357 CHAPTER in. Cx Sf**^r*~ V T1IE SURETY'S RIGHTS. tfT jf. Hicks, 3 Ired. Eq. 17 ; Barnes r. Morris, 4 Ired. Eq. 22 ; Egerton v. Allen, 6 Ired. Eq. 188; Ex parte Petillo. 80 N. Ca. 50; Stenhouse v. Davis, 82 N. Ca. 432; Deitzler ;;. Mishler, 37 Pa. 82 ; Henry v. Compton, 2 Head, 549 ; Galliher v. Galliher, 10 Lea, 23; Hatcher v. Hatcher, 1 Rand. 53. In Sawyers v. Baker, 72 Ala. 49, the purchaser, i. e. mortgagor, sold a moiety of the land purchased, and the sub-vendee's payment of his purchase money was credited upon the purchase money note given by the first vendee with a surety to his vendor. The surety paid what remained due on this note, but was not permitted to enforce, by subrogation, the original vendor's lien upon the moiety sold to the sub-vendee. — Ed. 7 Only the opinion of the court is given. — Ed. SECT. I.] UZZELL V. MACK. 361 first note, which left upwards of $300 of the purchase money unpaid to Houser. Subsequently Plummer has become insolvent, and Uzzell has paid to Houser the balance due him for the lots, and for the payment of which he was bound as Plummer's surety. When Mack purchased the lots, he knew that a lien was retained by Houser, in the deed to Plummer, and he also knew that the purchase money had not all been fully paid. There is no question but that, as a general principle, sureties, who pay a debt, are entitled to stand in the place of a creditor, as to all securities or liens, which he may have against other persons or property on account of the debt. The only question here is, whether there was any thing remaining after Houser's debt was paid, to which the surety, paying it, could be substituted. Where a surety pays a bond, or discharges a judgment, he extinguishes the only security the creditor has, and that being extin- guished, there is nothing to which he can be substituted. But if the creditor has a security against another person, for the same debt, or upon other property, these being distinct from the obligation he held on the surety, the discharge of that obligation by the surety does not extinguish such other security or lien ; as against such security or lien the debt still remains. The suret}* who paid the creditor is entitled to stand in his place, and to be substituted to all his rights. In the case before the court, Houser had two securities for his money: the bond of Plummer, Nelson, and Uzzell, and the lien reserved in the deed. When Uzzell, as Plummer's surety, paid the bond, that was extin- guished ; but the lien on the land is a distinct thing, constituting a dif- ferent security, which the paj'ment of the bond by Uzzell does not affect. Uzzell stands in the shoes of Houser, and the purchase money being unpaid, the lien on the land continues by the veiy terms of the deed. We think this a clear case for substitution, and reverse the decree, and order that a decree be entered for the complainant. 1 1 Vendor's lien on land conveyed to vendee. Lang v. Constance (Kentucky, 1898), 46 S. W. R. 692 ; Carter v. Sims, 2 Heisk. 166 ; Ellis v. Roscoe, 4 Baxter, 418, Accord. Foster v. Trustees, 3 Ala. 302 ; McNeill v. McNeill, 36 Ala. 109 (but see Sawyers v. Baker, 72 Ala. 49, 55), Contra. There was no subrogation in Bradford v. Morris, 2 Ela. 463 ; Blake v. Koons, 71 Iowa, 356 ; Miller v. Miller, Phillips Eq. 85, because by the law of the State the vendor had no lien. Corporation's lien on shares of stockholders. Young v. Vough, 23 N. J. Eq. 325; Klopp v. Lebanon Bank, 46 Pa. 88 ; Petersburg Co. v. Lumsden, 75 Va. 327. Statutory hens : (a) on property of obligors in tax-collector's bond. Knighton v. Curry, 62 Ala. 404 ; Turner v. Teague, 73 Ala. 554 ; Watts v. Eufaula Bank! 76 Ala. 474 ; Schnessler v. Dudley, 80 Ala. 547 ; Cummings v. Macv, 110 Ala. 479 ; Richeson v. Crawford, 94 111. 165. 101 Bl. 351 ; Hook v. Richeson, 115" Bl. 431. (b) Agricultural lien. McCoy v. Wood, 70 N. Ca. 125. (c) Lien incident to bond to prevent sacrifice of property by forced sale Bargor v Brechland, 28 Grat. 850, Accord. — Ed. 362 " PIERCE V. HOLZER. w [ CHAP. I1L ^A-< tain stocks, a part of the trust estate, to the Traders' Bank, to secure £ ^"" a debt due from the firm of which he was a member. In 1865, the Traders' Bank was organized as the Traders' National Bank, the defendant, and received the stock in question, the debt not being paid. In 1867, the defendant, at the request of the trustee, sold the stock and applied the proceeds on the debt. The certificate and the assign- ment showed that the stock was held in trust. The trust estate received no benefit from the pledge or the sale of the stock. The trustee 1 Rice v. Rice, 108 111. 190, Accord. A surety in a guardian's bond being subrogated, on payment, to tbe ward's claim against the guardian, the latter being a fiduciary cannot claim the exemption allowed ordinary obligors. Gilbert v. Neeley, 35 Ark. 24 ; State v. Atkins, 53 Ark. 303. Jmijii ilarly a surety may by subrogation obtain the preference belonging to the creditor of* a nauciary. Muldoon v. Crawford, 14 Bush, 125. — Ed. 366 BLAKE V. TRADERS' NATIONAL BANK. [CHAP. IIL was afterwards removed, and new trustees were appointed in bis place. Before the removal of the trustee, suit was commenced against the plaintiffs on the bond, which was prosecuted after the appointment of the new trustees, and judgment recovered, upon which execution issued for the value of the stocks, among other things, and the judg- ment w:is paid by the plaintiffs. These facts show that the defendant received and sold the stocks, with notice of the trust, and was liable to the new trustee s, and to the cestuis que trust for the avai ls. Shaw ^""Spencer ; i boring v. Brodie ; 2 Montreal Bank v. Sweeny. 3 The general rule, as stated by Lord Brougham in Hodgson v. Shaw, 4 is, " that the surety paying off a debt shall stand in the place of the creditor, and have all the rights which he has, for the purpose of obtaining his reimbursement." In this case, the judge of probate was the obligee in the bond which constituted the debt, but it was for the benefit of the trust estate, and the legal and beneficial owners of that estate were the real creditors, to whose rights the suret}* would be subrogated on paying the debt. It is true that the trustees elected to pursue their remedy upon the bond against the surety, and neither the trustees nor the cestitis que trust would have a right of action against the defendant, after full indemnity had been obtained in the action on the bond ; but there was no other election of remedy, or discharge or satisfaction of a cause of action, than is always the case when a credi- tor who holds collateral security for a debt gets satisfaction from a surety of the debtor. The surety takes the place of the creditor _as to the debt, and as to the security. See cases cited in notes to Dering v. Winchelsea. 5 If, as is argued, the original trustee had no right of action against the defendant, and the stock was not his property, and was not pledged by him as security for the debt which the plaintiffs paid, and if the defendant was only liable to the new trustees as hold- ing, or for having converted, the trust fund, and if the fund was made good by the payment to the trustees by the suret}', it would make no difference. T he payment was to the trustees, and w as a substitute for the fund whic h was in the hands of the defendant, ana w~hich IT was bound to account for to the trustees, and would give to the surety all tfie rights winch the trustees had to recover the fund ; it would operate as an assignment to the surety of the fund, and of the right of action of th e trustees to recover " TE In this case, the defendant and the surety were both liable to the trustees for the amount of the trust prop- erty ; the former, in consequence of participating in the wrongful act of the first trustee ; and the latter, by his contract to indemnify the estate against such act. The cases are analogous where one owner of property has claims for a loss against an insurer and a tortfeasor. The insurer is in the nature of a surety, and, upon paying the loss, he is subrogated to the rights of the owner to recover for the tort. Hart 1 100 Mass. 382. 2 134 Mass. 453. 3 12 App. Cas. 617. 4 3 Myl. & K. 183, 190. 5 1 White & Tudor'sLead. Cas. in Eq. (6th ed.) 114. SECT. I.] BITTICK V. WILKINS. 367 v. Western Railroad ; * Clark v. Wilson ; 2 Mercantile Ins. Co. v. Clark. 3 The cases cited in Sheldon on Subrogation, § 89, sustain the proposition in the text, that, " where the sureties of a trustee have been compelled to answer for his breach of trust, they are subrogated to the rights of both the trustee and the cestuis que trust against those who have participated in his wrongful acts." 4 The defendant bank contends that the right of action to which the surety was subrogated was barred b}* the statute of limitations. The bank took the stock charged with the trust, and it hold the specific property, and the proceeds of the sale of it, as a trust fund, under a trust to return it to the trustees. The trustees and cestuis que trust both had an equitable remedy against it as such trustee. This remedy would not be affected by the statute of limitations. 1 Perry on Trusts, § 217. 2 lb. § 828. 6 (7 x^/u^ C. S. BITTICK and Another v. J. A. WILKINS and Another. In the Supreme Court, Tennessee, January 31, 1872. [Reported in 7 Ileiskell, 307.] Deaderick, J., delivered the opinion of the court. 6 The complainants as sureties of H. Hill, sheriff of Williamson County, paid a large sum of mone}- to B. R. Hughes, who had obtained judg- ment against defendant Wilkins and others, upon which execution was issued, which came to the hands of the sheriff. The sheriff failed to make due return, and judgment upon motion was rendered against him and his sureties, upon which execution issued ; and having paid the judgment, complainants filed their injunction and attachment bill in the Chancery Court at Franklin, seeking to have a debt due from the county of Williamson to defendant Wilkins, of about $600, applied towards the satisfaction of the amount paid by them on his debt to Hughes. Complainants claim that, as sureties of the sheriff, having paid Wil- kins's debt to Hughes, they have an equity to be substituted to the rights of Hughes against Wilkins. The complainant Bittick died pending the l 13 Met. 99. 2 103 Mass. 219. 3 118 Mass. 288. 4 Wheeler v. Hawkins, .116 Ind. 515 ; Wernecke v. Kenyon, 66 Mo. 275 ; Cowgill v. Linville, 20 Mo. Ap. 138 ; Clark v. First Bank, 57 Mo. Ap. 277 ; Brown v. Houck, 41 Hun, 16; Bunting v. Ricks, 2 Dev. & B. Eq. 130; Powell v. Jones, 1 Ired. Eq. 337 (semble) ; Fox v. Alexander, 1 Ired. Eq. 340 ; Kennedy v. Pickens, 3 Ired. Eq. 147 ; Wilson v. Doster, 7 Ired. Eq. 231; Harris v. Harrison, 78 N. Ca. 202; Thompson v. Humphrey. 83 N. Ca. 416; Rhame v. Lewis, 13 Rich. Eq. 269 ; Davidson v. Crisp (Tennessee 1874), 24 A. & E. Encyc. of Law, 218 (cited) ; Edmunds v. Venable, 1 Pat & H. 121 ; Pinckard v. Woods, 8 Grat. 140, Accord. Compare Winslow v. Otis, 5 Gray, 360. — Ed. s The rest of the opinion is omitted- — Ed. 6 Only a portion of the opinion of the court is given. — Ed. 368 BRINSON V. THOMAS. [CHAP. III. suit, and it was revived in the names of Jo. J. Green and Jas. T. Shan- non, his executors. A surety, by paying the debt of his principal, becomes entitled to be substituted to all the rights of the creditor, and to have the benefit of all the securities which the creditor had for the payment of the debt, without any exception ; and is entitled to all his rights to airy fund, lien, or equity, against any other person or property, on account of the debt. 1 L. C. Eq., 92-3, and this right of substitution subsists in favor of a person who is compelled to pay the debt of another, in order to protect his own interest. The complainants, as sureties of Hill, the sheriff, paid the debt of Hughes, for which defendant Wilkins was primarily liable. Hughes had the right, upon his judgment, upon which execution had been issued, to file his bill to subject the debts due to Wilkins to the satisfaction of the judgment ; and upon the payment of the debt by the sureties of Hill, they were substituted to all the rights of Hughes to any fund or equity which he had against any person or property, on account of the debt. It was therefore not necessary that complainants should have obtained judgment, and issued execution thereon, before filing their bill. 1 H. BRINSON and Others v. F. D. THOMAS and Others. In the Supreme Court, North Carolina, June Term, 1856. [Reported in 2 Jones, Equity, 414.] Nash, C. J. Francis J. Prentiss was duly elected sheriff of the county of Craven, and executed his official bond, with the plaintiffs as his sure- ties. Prentiss appointed the defendant Thomas, as his deputy, and took from him a bond, with the other defendants as his sureties, for the due discharge of his duties. Among the covenants is the following : " So that the said Francis J. Prentiss shall not, by a.x\y act or omission of the said Francis D. Thomas, become liable, or subject, to any dam- age, loss, or cost." Claims were put into the hands of the deputy, Thomas, by one Lovick, to a considerable amount, which were collected by him, and appropriated to his own use. The plaintiffs are the sure- ties of the sheriff, Prentiss, upon his official bond, and having been compelled to pay to Lovick the amount received by Thomas, this bill is l Saint v. Ledyard, 14 Ala. 244 ; Sweet v. Jeffries, 48 Mo. 279, Accord. Dillon v. Cook, 13 Miss. 773, Contra. Similarly, if a sheriff by mistake takes the goods of A. on an execution against X. and delivers them to the judgment creditor, and if A. then compels the surety of the sheriff to pay for the latter's trespass, the surety is subrogated to A. 's right to sue the judgment creditor for the value of the goods. Skiff v. Cross, 21 Iowa, 459. A surety for a sheriff, compelled by the default of his principal to pay the person fnjured by his default, is, of course, subrogated to the latter's rights against the sheriff. Merryman v. State, 5 Har. & J. 423 ; Boughton v. Bank, 2 Barb. Ch. 458. SECT. I.] BKINSON V. THOMAS. 369 brought by them to subject Thomas and his sureties to the repayment of the money so by them paid. The sheriff, Prentiss, is insolvent. On the part of the defendants it is objected, that the plaintiffs cannot subject them on their bond, because there is no privity between the plaintiffs and defendants. The deputy sheriff is an officer, strictly speaking, unknown to the law. His acts, as such, are the acts of the sheriff, and in the name of the latter he executes, and returns, all pro- cess. The bond he gives, therefore, is not an official bond, but a per- sonal contract between the parties. A sheriff, in most of our counties, cannot personally perform all his official duties, and for his ease, and for the public convenience, he is allowed to appoint as many deputies as he thinks proper. These deputies are his agents, and all their law- ful acts are his acts, and all their misfeasances are his misfeasances. The bonds which they give the sheriff are for his protection. Persons who are injured by his malversation in office, either in not executing process, or in appropriating to his own use, moneys which come into his hands by virtue of his appointment, can have no redress upon his bond, either against him or his sureties. The deputy's bond to the sheriff is not cumulative. The claim of the plaintiffs, in this case, rests upon a different principle ; the right in equity of a suret}' who pays a debt, his principal was bound to pay, to be substituted to his rights. He is also entitled in equity to the benefit of such collateral securities as his prin- cipal has taken to secure himself. In this case, the plaintiffs were co- sureties on the sheriff's bond, and though there is no privity between them and the defendants, on the deput} T 's bond, } - et, they stand so far in that relation to them, that, in a Court of Equity, the doctrine of sub- stitution or subrogation will be applied. And, as between those stand- ing strictly in the relation of co-sureties, the doctrine of equality is full}' settled. Adams' Eq. 269-270. And the ground of relief does not stand upon the notion of mutual contract, expressed or implied, between them ; but it arises from principles of equity, independently of contract. 1 Sto. Eq. Jur. p. 472, The duty of exoneration extends to all persons who are within the scope of the equitable obligation. 1 Sto. Eq. Ju. s. 493, 5. The equity of the plaintiffs does not depend upon an}- contract between them and the defendants, but upon the equity existing between them and the sheriff, Prentiss, which consists, not only in compelling relief from him, but the right to be subrogated to his place, and to his collat- eral securities. By the bond of the defendant Thomas, the latter bound himself to indemnif}' the sheriff, not only against any damage, loss, or cost, arising from any act, or omission of his, the defendant Thomas ; but further, that he should not become liable or subject to an}' loss, damage, or cost, accruing for airy act or omission. Now, there can be no doubt that, upon the failure of the defendant Thomas, to pay to Lovick the money collected for him, a right of action, under the covenant recited, accrued to the sheriff; it was an " omission " on the part of Thomas, which amounted to a breach of his bond ; because he, the sheriff, became liable to pa\' the amount to Lovick, and subject to a suit 24 370 PHILBRICK V. SHAW. [CHAP. IIL on his official bond. The plaintiffs who have paid the debt due to Lovick, as the sureties of the sheriff, have a right to be subrogated in this court, to his rights against the defendants, and to a decree for all the moneys paid b} T them to Lovick, as sureties of the sheriff, deducting all just credits to which Thomas may be entitled against the sheriff. It is objected by the defendants, that persons are made plaintiffs who have no interest in the controversy. All the sureties on the sheriff's bond are complainants ; whereas the claim of Lovick was paid bj* Hiram Brinson and Samuel Mastin ; they, therefore, are the parties immediately interested in the claim now brought forward against Thomas. The other plaintiffs are also interested ; for, if the debt should not be made out of the defendants, they will be liable for contribution. The case must be referred to the master, to take an account of the money paid by the plaintiffs Brinson and Mastin, to Lovick, as sureties on the official bond of the sheriff ; and, in taking the account, the master will allow the defendants all just credits against the sheriff. Per Curiam. Declare accordingly. 1 PHILBRICK and Another v. SHAW. Tn the Supreme Court, New Hampshire, December, 1881. [Reported in 61 New Hampshire Reports, 356.] In equity. The material allegations in the bill are, that at the April term, 1870, of the Supreme Judicial Court for this county, one Smith recovered judgment against one Kayes, upon which execution was duly issued and placed in the hands of one Haynes, a deputy sheriff, since deceased, for collection, with orders to lev}' it on certain personal property belonging to Kayes ; that at the same term the de- fendant recovered judgment against Kayes, upon which an execution issued, and was committed to Haynes with directions to levy it on the same property ; that the defendant gave Haynes a bond of indemnity in the usual form to indemnify him for levying his execution, and thereupon Haynes made the levy and applied the proceeds of the prop- erty on the defendant's execution, and returned that of Smith unsatis- fied ; that Haynes has since died insolvent, and with no estate for the pavment of his debts ; that in 1874 Smith brought suit against the sheriff of the county for the default of Haynes, his deputy, in applying l Blalock v. Peake, 3 Jones, Eq. 323 ; Briggs v. Huston, 14 Lea, 233 ; Nebergall v. Tyree, 2 W. Va. 474, Accord. See also People v. Schuyler, 4 N. Y. 173, 183. A suretv for a trustee, upon paying the latter's liability incurred in behalf of the trust estate, is permitted to reimburse himself through the trustee's right to compel exonera- tion from the trust estate. Bushong v. Taylor, 82 Mo. 680; Boyd v. Myers, 12 Lea, 175. — Ed. SECT . i.1 PHILBRICK V. SHAW. 371 the proceeds of the property on the defendant's execution, and recov- ered judgment against him, which he has paid ; that thereupon the sheriff brought suit against the plaintiff Philbrick, who was a surety on Haynes's official bond, for the amount so paid ; that the suit was entered in court, and Philbrick notified the defendant to appear and defend it, which he neglected to do ; and that judgment was rendered against Philbrick in said suit, which he has since paid. The prayer is, that the defendant's bond may be set apart for Philbrick's benefit ; that he may be subrogated to the rights of Philbrick therein; and that judgment may be entered thereon for his benefit for the amount paid by him to the sheriff, with interest and costs. General demurrer by defendant. J. H. Albin and W. S. LacM, for the plaintiffs. J. Y. Mugridge and W. L. Foster, for the defendant. Blodgett, J. The contention of the defendant is, that there is no privity of contract or obligation between the plaintiff and himself; that the condition of his bond was to save Haynes harmless, and not his sureties ; and that inasmuch as neither Haynes nor his estate has sus- tained any loss, the contingenc}' upon which the obligation depended has not happened, and there has consequently been no breach of the bond. This defence is both ingenious and novel, but it has no foundation in principle or upon authority. The right of subrogation does not rest upon contract or privity, but depends upon principles of natural justice and equity, and will be applied in favor of one who has been compelled to perform the obligations of another. Sheld. Sub., ss. 3, 93, and authorities cited. Nor was the defendant's bond for the protection of Haynes alone. His sureties were responsible for his official conduct, and equally liable with him to make compensation to any injured party for his wrongful acts. His protection was their protection ; and as both stood upon a common ground of interest in respect to the bond, it is to be regarded in equity as intended for the joint benefit of both, and as now held by the administrator of Haynes in trust for the plain- tiff surety. But even if it was intended for the sole benefit of Haynes, Philbrick, having performed the obligations resulting from Haynes's default, which the defendant occasioned, and from which he derived a substan- tial benefit, is entitled to be subrogated to all the rights Haynes had, or would have had if living, against the defendant, and may therefore resort to the bond as a means of reimbursement. Brinson v. Thomas ; Blaklock v. Peake ; 1 Miller v. Sawyer ; 2 Skiff v. Cross ; 3 Lewis v. Palmer ; 4 R. R. Co. v. Trimble. 5 The right of subrogation exists where, from all the circumstances of the case, it ought in equity and good conscience to exist Mosier's 1 3 Jones Eq. 323. 2 30 Vt 412. * 21 Iowa, 459. * 28 N. Y. 271. & 51 Md. 99 ; Sheld. Sub., ss. 86, 87, and authorities cited ; 5 Wait Act. and Def. 213. 372 COMMONWEALTH V. STRATON. [CHAP. IIL Appeal; 1 Shotwell v. Ins. Co.;* Kernochan v. Ins. Co. ; 8 Goswiler's Estate. 4 This is such a case. Demurrer overruled, and case discharged. THE COMMONWEALTH for use, &c. v. STRATON, &c. In the Court of Appeals, Kentucky, November 14, 1831. [Reported in 7 J. J. Marshall, 90.] This is an action of covenant founded on the official bond of Straton against him and his sureties. The breaches assigned are in substance, that two executions issued on the 3d of March, which, on that day, were placed in the hands of one of Straton's deputies for collection. These executions were against Alexander Gill, Wrn. Patterson, and H. M. Gill, the two last being but sureties for the former. That the deputy, on the 5th of March, received other executions which issued, on that day, against the estate of Alexander Gill. That while all these execu- tions were in full force in the hands of the deputy, Alexander Gill, at the request of his sureties, Patterson and H. M. Gill surrendered prop- erty for the satisfaction of the executions against the sureties, and required the deputy to levy the executions against the sureties on the property thus surrendered. That said deputy in violation of law levied the executions which issued, on the 5th, upon the property given up for the benefit of the sureties, and gave the executions so levied a'preference over those which issued on the 3d, and which came to his hands first. That the deputy, after levying the executions against the sureties upon some personal property, illegally permitted a constable to take it and dispose of it. That, in consequence of the illegal acts of the deputy in permitting the property of A. Gill, which should have been applied in satisfying the executions against the sureties, to be disposed of other- wise, Win. Patterson had been compelled to pay off one of the execu- tions, and H. M. Gill had been compelled to pay off the other out of their own estates to their great injury, &c. The defendants demurred to the declaration, and the court gave judg- ment in their favor. To the form of the declaration we perceive no objection. It contains every averment necessary to present the matter relied on fully. The decision of the demurrer must turn upon the facts. In behalf of the defendants, two grounds are assumed : 1st, that the facts averred being true, do not show any liability on the part of the defendants to the relators, and 2d, if there be any liability, it is sepa- rate and not joint ; and so the relators have misconceived their action by uniting. Upon the first point, it is contended, that the law provid- ing that an execution shall bind the defendants' property from the time of its ^livery, and requiring the execution first delivered to be first i 56 Penn. St. 76. 2 5 Bosw. 263. 3 17 N. Y. 428. 4 3 P. & W. 200. SECT. I.] COMMONWEALTH V. STRATON. 373 satisfied, &c, was designed for the benefit of the plaintiffs in the execu« tion alone, and if disregarded b}' the officer, no one can be injured, provided the plaintiff's debt is made. In addition it is urged, that the claim of the relators against A. Gill, is in dignity not higher than a simple contract and that to permit their success in this case, would be to give them a preference over judgment creditors whose executions must have remained unsatisfied, but for the course taken by the deputy sheriff. The 8th section of the act to amend and reduce into one, the execution laws approved 12th February, 1828, provides that no writ of execution shall bind the estate of the defendant, but from the time of its delivery. For the better manifestation of said time the officer is required to endorse the da} r of the month, time of da}' and year when the writ is received ; ' ; and if two or more writs of execution in favor of different parties against the same person shall be delivered to the officer upon the same, or different days, that which came first to his hands shall be satisfied first." Here is a very plain rule for the obser- vance of officers laid down. It is unquestionably their duty to obey it. But if they do not, then it is insisted, no one can complain, unless he be plaintiff in the execution first delivered, and which has, in violation of the rule, been postponed. Why restrict it to plaintiffs in execution? There is nothing in any act of assembly which gives such a limitation, in express terms, to the officer's responsibility : nor can we discern the principles upon which, b} - construction, we can decide in favor of such a limitation. The sheriff is required to covenant in his bond of office, that " in all things he will truly and faithfully execute and perform his office according to law," and " an} 7 person injured by a breach of the condition of his bond, may prosecute a suit thereon and recover dam- ages." II Digest, 1133. Under these provisions, the only questions in fixing the sheriff's liability seem to be, first, has he violated any con- dition of his bond, and second, has the relator been injured by it? If the bond has been violated, 3 - et if there has been no injury to the relator, he must fail in his suit. It might, therefore, be conceded, that if A. Gill had instituted this suit, because the rule for satisfying the execu- tion against him had not been observed by the sheriff, he could not recover in an} r event more than nominal damages, if that : for if his property went to pa}- his just debts, the order in which they were paid could be to him no more than a matter of conscience and feeling, and to remunerate his chagrin in not being permitted to discriminate and show favoritism among his creditors, could not be done bj' any standard known to the law. But this, we conceive, is a very different thing from that of making individuals liable for a debt, and ultimately compelling them to pay it ; when, if the rule prescribed for sheriffs had been observed, no such burden would have fallen on them. If the executions first delivered had been satisfied first, as the law directed, the relators would have been entirely discharged from responsibility ; but A. Gill would still have remained bound for whatever sum his property could not pay, and this, in respect to him, must have been the case in every event. The consequence resulting is, that he could not be injured. But 37-4 COMMONWEALTH V. STKATON. [CHAP. III. the injury to the relators is striking ; if the sheriff does his duty, they pa}' nothing; if the sheriff violates his duty, they are made to pay. This to them as sureties, if their principal is insolvent, is as grievous as it would be, were the sheriff to take their property under color of his office to satisfy an execution in which they were not bound. It is in either case, the loss of so much estate both proceeding from the wrong- ful acts of the officer, and we cannot see why good policy and sound morality should not, in both instances alike, hold him answerable. It is asked, shall the sheriff be bound to know who is principal, and who is surety in an execution ? We answer, he is not ; but he is bound to do his duty " according to law" If he fails, he risks all consequences, and cannot thereafter excuse himself upon the ground, that the process did not point out his danger. If the sheriff, or his deputy, had levied the executions first delivered on the property of the sureties, it is prob- able, they might have protected it to some extent, if not entirely under the provisions of the 35th section of the aforesaid act of 1828. But it is deemed unnecessary to investigate the point now, how far the prop- erty of the principal could be substituted as matter of right to save that of the surety. No levy seems to have been made on the estate of the sureties until after the sale of the property of the principal, and the application of the proceeds to the payment of the junior executions. Permitting the constable to take off a part of the property levied on by the sheriff, he having made the first levy, was likewise a violation of the condition of the bond. The officer holding the oldest execution is not entitled to take property out of the hands of another officer who has made the first levy, although it be in virtue of a younger execution. We do not perceive the weight of the arguments founded on the rela- tive dignity of the debts, or claims, in behalf of the relators against A. Gill, and those of his judgment creditors. The rule which directs exe- cutors and administrators to respect the dignity of debts canuot operate in the application of the rules prescribed by statute for the government of sheriffs to the facts of this case. We are, therefore, of opinion, that the declaration contains averments of facts which show that the relators have been injured by the conduct of Straton's deputy, and for which they are entitled to a remedy on the official bond. Upon the second point we are divided in opinion. The Chief Justice thinks that the relators have sustained that kind of an injury for which they may unite in the present action, or sue severally. Judge Under-- wood is of opinion, that their injury is altogether several, and that they cannot sue jointly. Wherefore, the judgment must be affirmed with costs. Mills and Brown, for plaintiffs ; Monroe, for defendants. Absent, Judge Buckner. 1 l Hill v. Sewell, 27 Ark. 15 ; Straton v. Commw, 2 Dana, 397 ; Rowe v. Williams, 7 B. Mon. 202 ; Miller v. Dyer, t Duv. 263, Accord. O'Hara v. Schwab, 26 La. An. 78, Contra. The surety under the circumstances of the principal case cannot maintain an action of tort against the sheriff. Livingston v. Anderson, 9 Mass. 251. — Ed. SECT. I.] REGINA V. ROBINSON. 375 REGINA v. HENRY ROBINSON. In the Exchequer, May 25, 1855. [Reported in Ifurlstone §• Norman, 275, note (a).] Watson, in Easter Term (May 1. 1855), moved that James Robinson, a surety, who bad paid the debt of the defendant to the Crown, should be placed in the situation of the Crown ; and that a writ of extent, which had issued against the defendant, might be put in force in his behalf. 1 Watson, in support of his motion. It is the practice of the Court of Exchequer, where a surety pays the debt due from any defaulter to the Crown, to allow him to stand in the place of the Crown, and to give him the benefit of the prerogative process against the principal. This is not an extent in aid.' 2 A surety who pays the debt of his principal is entitled to an assignment of the securities for the debt. The prac- tice was stated by the court in The King v. Bennett. 3 That case shows that the debt to the Crown is not extinguished. Reg. v. Doughty is a case where the sureties of a bond, having paid the bond debts to the Crown, got the benefit of the bond. Rex v. Webber 4 is to the same effect. [Parke, B. In Copis v. Middleton Lord Eldon said that he took it to be clear, tl that if at the time a bond is given a mortgage is made also for securing the debt, the surety, if he pays the bond, has a right to stand in the place of the mortgagee, and as the mortgagee cannot get back his estate without a conveyance, that securitj- remains a valid and effectual security notwithstanding the bond debt is paid ; but if there is nothing but the bond, my notion is, that, as the law says that bond is discharged by the payment of what was due upon it, the bond is gone and cannot be set up." That case decided that the surety does not become a {specialty creditor, and therefore it cannot be said that he is entitled to all the creditor's rights. The cases in Wightwick occurred before the decision in Copis v. Middleton.] It is the constant practice for a surety paying a debt to take an assignment of a judg- ment. 5 [Parke, B. In the present case the extent did not go upon the bond.] Per Curiam. Take an order nisi* to be served on the defendant and the Crown. 7 1 The case is somewhat abridged. — Ed. 2 See as to this Hex (in aid of) Hollis v. Bingham, 1 Cr. & M. 862; s. c. 2 C. & J. 130; 57 Geo. III., c. 117. 3 Wightwick, 1 . * Wightwick, 3, note. 5 He cited Anon. Sav. 52, pi. 111. See further West on Extents, 307; Manning's Exchequer Practice, Revenue Branch, 71 ; Anon. Sav. 30, pi. 72 ; Burge on Principal and Surety, 352 ; Whitehouse v. Partridge, 3 Swanst. 365, 376. 6 The order was afterwards made absolute, the counsel for the Crown appearing and not opposing. — Ed. 7 Regina v. Salter, 1 H. & N. 274 ; Hunter v. U. S., 5 Pet. 173, 5 Mas. 62 ; Dias o Bouchaed, 10 Paige, 445, 3 Edw. 485, Accord. — Ed. 376 TtOWBIGGEN 'v. BOVRNE. -{[CHAP. UL In the Exchequer, February 15, 1837. [Reported in 2 Younge Sf Collyer, 462.] r7 The Bournes had obtained two separate judgments on a joint and several note executed by Cawthorne as principal and the plaintiff as surety. The plaintiff had paid the amount of the judgment against herself. The bill prayed a declaration, that the plaintiff was entitled to have the judgment, obtained by the Bournes against the defend- ant Cawthorne, assigned by the defendants, the Bournes, to the plaintiff, with power to issue execution thereon, and that the defend- ants might be decreed to deliver the judgment paper in respect of the said judgment to the plaintiff, and that it might be referred to the Master to settle an assignment of the said judgment, the plaintiff offer- ing to pa}' what, if anything, was due to the defendants on the said judgment, and to indemnify them against all costs, charges, damages, and expenses, by reason of any proceedings by the plaintiff under such assignment. The bill also prayed an injunction to restrain the defend- ants from entering up satisfaction on the said judgment, or releasing or discharging the same. To this bill the defendant Cawthorne filed a general demurrer, for want of equit}'. 1 Alderson, B. I expressed my opinion on the hearing of this case, that the plaintiff could not derive any benefit from the assignment of the judgment against Cawthorne ; and that, supposing that to be the case, there was not any ground for the interference of a court of equity to decree that assignment. The question I desired an opportunity to consider was, whether under the circumstances there would be any remedy at law, supposing an assignment of the judgment were actually executed to the executors of Mr. Dowbiggen. It is quite clear from the authorities, that a surety who pays the debt of the principal debtor is entitled to the benefit of all those securities which the creditor him- self could render available against the principal debtor. That point was in effect determined by Chief Baron Alexander, on the argument of the demurrer in this case ; and I cannot help regretting that he did not then dispose of the question of law which is now raised, and which was as ripe for discussion seven years ago as it is at the present time. In this case the assignee, if he obtain an assignment of the judg- ment, must necessarily proceed in the name of the assignor, to enforce that judgment. Now. what are the facts of the case? A joint and several promissory note was entered into by Cawthorne and Dowbig- gen as his suret}^. The note when due was not paid, and the payee of the promissory note brought an action, and obtained judgment for the full amount of the note and interest against Cawthorne, the principal 1 The statement of the ease is condensed and the arguments are omitted. — Ed. SECT. I.J DOWBIGGEN V. BOURNE. 377 debtor. For I think it is fully established that Cawthorne was the prin eipal debtor. The holder of the note, having obtained this judgment against Cawthorne, finding that it was not likely to be made available, brought another action, as he was entitled to do, against Dowbiggen the surety, and recovered judgment against Dowbiggen for the amount of the note and interest. Dowbiggen paid the amount of the principal money and interest due on the note, and the costs of the action against him, and the holder of the note, having been thus satisfied the whole of the prin- cipal money and interest, had no further claim, except perhaps in respect of the costs of the action against Cawthorne ; and if he had afterwards ventured to proceed on the judgment against Cawthorne, the Court of King's Bench, in which the judgment was recovered, would have interfered in a summary manner to stay proceedings on the judgment, except for these costs. The whole effect, therefore, of assigning the judgment to the plaintiff would be to give her that which would be wholly useless, except for the purpose of recovering the"costs o'l tne action against Cawthorne, and to which, as administratrix of DowBTggeii, she could not possibly have any right. And that~it had been felt that she had no such right, was evident from the tender to the defendants, the Bournes, of those costs. The case in substance is not distinguishable from the case 1 before Lord Eldox, in which he says, that if a bond is given by principal and surety, and at the same time a mortgage is made for securing the debt, the surety paying the bond has a right to stand in the place of the mortgagee ; but that if there is nothing but the bond, the surety, after discharging it, cannot set it up against the principal debtor. It appears to me that any assignment of the judgment would be en- tirely useless ; and, therefore, under the whole of the circumstances, I think the bill must be dismissed ; but as the Bournes might, I think, readily have given to Mrs. Dowbiggen what she required, though it was perfectly useless, I think the bill must be dismissed against them without costs. There is no ground or pretext for making the surety- pa}' the costs of the principal ; the bill must, therefore, also be dis- missed without costs against the defendant Cawthorne. 2 * Turn. & Russ. 231. 2 State v. Miller, 5 Blackf. 381 ; Sherwood v. Collier, 3 Dev. 380, Accord. Norris v. Ham, R. M. Charlt. 267 ; Norwood v. Norwood, 2 Har. & J. 238 {semble) ; Sotheren v. Reed, 4 Har. & J. 307; Perkins v. Kershaw, 1 Hill, Ch. 235 ; Thomson v. Palmer, 3 Rich. Eq. 139 ; Hill v. Kelly, Ir. T. R. 265 ; Purdon v. Purdon, 1 Hud. & Bro. 229, Contra. In the cases above cited, as in the principal case, the surety and principal we re co- oblig ors, u lieu tne surety and principal are not co-obligors, but are liable on sepa- rate akhou^lTco]extensrve undertakings, t he surety who pays, either before or after .^ j udgment, discharges at law only his own liability. Accordingly his right of subroga- 'O ^-~ -jJ turn to the creditor's right on the claim against the principal is everywhere conceded. ' ' Hodgson v. .Shaw, 3 M. & K 183; In re Lord Churchill, 39 Ch. D. 174; Brown" v. Decatur, 4 Cranch, C. C. 477 ; Dodd v. Wilson, 4 Del. Ch. 399 ; Livingston v. Andep son, 80 Ga. 175; Allen v. Powell, 108 111. 584; Downey v. Washburn, 79 Ind. 242; Davis v. Schlemmer (Indiana, 1S98), 50 N. E. R. 373 ; Tardy v. Allen, 3 La. An. 66; 378 EX PARTE ATKINSON, BAKER, AND DARLING- [CHAR. III. QUEEN v. DOUGHTY. In the Exchequer, December 8, 1702. [Reported in Wightwick 2, n. (b.).] A surety paying the Crown's debt was ordered to stand in the place of the Crown, and to have the aid of the court to recover the whole against the principal in the bond or a moiety against the other surety. 1 Ex parte ATKINSON, BAKER, AND DARLING. — In re BRIGHAM. In Chancery, before the Lords Commissioners, July 28, 1792. [Reported in Cooke, Bankrupt Laws [8th edition), 232.] It appeared that the bankrupt was indebted to Atkinson in the sum of £400, and having occasion for a further loan, prevailed upon him to become security for the sum he wanted to borrow. Accordingly Atkin- son, on the 26th of September, 1786, joined the bankrupt in a bond to Darling to secure £200 for Sarah Huntingford, who lent the bankrupt the money. And on the 26th of March, 1787, Atkinson joined in a bond to Baker to secure £300. On the 6th of April, 1789, a commission Bishop v. Rowe, 71 Me. 263 ; Ferguson v. Carson, 86 Mo. 673 ; Townsend v. "Whitney, 75 N. Y. 425 ; Gifford v. Rising, 12 N. Y. Sup. 430 ; First Bank v. Woolsey, 31 N. Y. Ap. Div. 61 ; Keokuk Co. v. Keokuk Co. (Oklahoma, 1896), 47 Pac. R. 489; Elkinton v. Newman, 20 Fa. 281 : Enders v. Brune, 4 Rand. 438 ; Robinson v. Sherman, 2 Grat. 178 ; Leake v. Ferguson, 2 Grat. 419 ; HiU v. Manser, 11 Grat. 522 ; Murray v. Meade, 5 Wash. 693 ; La Touche v. Pallas, Hayes, 450. But see, contra, Morse v. Williams, 22 Me. 17. Similarly, an indorser paying a hill or note or a judgment thereon against himself is subrogated to the holder's judgment against a prior party to the instrument. Lyon v. Boiling, 9 Ala. 463; Schoonover c. Allen, 40 Ark. 132; Dooley v. Lackey, 55 111. Ap. 30 ; Hoffman v. Butler, 105 Ind. 371 ; Schleissman v. Kalleuberg, 72 Iowa, 338; Des Moines Co. v. Colfax Co., 79 Iowa, 497 ; Conway v. Straney, 24 Miss. 665 ; Clason v. Morris, 10 Johns. 524; Eno v. Crooke, 10 N. Y. 60; Corey v. White, 3 Barb. 12; Baily v. Brownfield, 20 Pa. 41 ; Old Dominion Bank v. Allen, 76 Va. 200. But see contra, Topp v. Branch Bank, 2 Swan, 184; Kirtland v. Meigs Co., 4 Lea, 414, 420 (semhle). — Ed. 1 Anon. Sav. 30; Babb's Case, Wightw. 2 n. (c) ; Webber's Case, Wightw. 3n(rf); King v. Clark, Com. 389, Bunb. 221, s. c. (semble) ; King v. Bennett, Wightw. 1, 6 (semhle) ; Salkeld v. Abbot, Hayes, 576, 583-4; Jackson r. Davis, 4 Mackey, 194 (co- surety) ; West v. Creditors, 3 La. An. 529 ; Orem v. Wrightson, 51 Md. 34 ; Champney v. Lyle, 1 Binn. 327 ; Robertson v. Trigg, 32 Grat. 76 (co-surety), Accord. South Carolina Bank v. Adger, 2 Hill, Eq. 262 (co-surety) is contra, hut would probably not be followed in South Carolina. See cases cited in first paragraph of note to Lidderdale v. Robinson, infra, p. 38. — Ed. SECT. I.] EX PARTE ATKINSON, BAKER, AND DARLING. 379 issued against Brigham. And on the 28th of April, 1789, Darling, as trustee for Mrs. Huntingford and Baker, on his own aceount, proved their respective bonds under the commission. The same afternoon, but after the proof made, Atkinson paid Mrs. Huntingford the money. Previous to Baker having made his deposition, Atkinson had lodged the amount of his bond in the hands of a banker in trust for Baker, who under those circumstances hesitated to take the usual oath ; but with an intent to enable him conscientiously to do so, he ordered the mone}' to be returned to Atkinson, which was done, and then he proved as before stated, and was afterwards paid the amount of the bond by Atkinson. On the 13th of September, 1791, a dividend was declared under the commission, but the assignees refused to pay an3* dividends to Darling and Baker, alleging that their debts had been discharged. It was insisted for the petition that the surety had an equit}* to retain the proof made by the original creditor who became a trustee for him, and the suret} T might even file a bill, to compel the original creditor to prove the debt, if he refused to do it, and a case of Philips v. Smith, in the Exchequer was cited, where a bill was filed by a surety of a person become bankrupt against the creditor, to sta}- his proceedings at law until he went before the commissioners to prove his debt, that he might thereb}* become a trustee for the surety, which was ordered upon bring- ing the money into court. 1 The Lords Commissioners were of opinion that the surety had a right to the benefit of the proofs made by the original creditors, and that such proofs were well made, and ordered the dividend to be paid to Baker and Darling, in trust for Atkinson. 2 1 Bill by surety in a bond against the obligee, who is a mere trustee, and his cestui que trust, to compel them to prove under the commission against the obligor. Injunc- tion for want of an answer, and upon motion to dissolve it the defendants were ordered to prove upon plaintiff's bringing money into court. Beardmore v. Cruttenden, Hil. Term, 1791. In accordance with Beardmore v. Cruttenden, see Ex parte Houston, 2 Gl. & J. 36, 12-43 ; Jackson v. Magee, 3 Q. B. 48, 56. — En. 2 Ex parte Brook, 2 Rose, 334 ; Ex parte Johnson, 3 D. M. & G. 218 (Accommoda- tion accentor) ; Ex parte Came, 3 Ch. 463 (Guarantor), Accord. A surety paying the creditor in full and therefore subrogated to the benefit of the creditor's proof against the bankrupt principal, cannot recover interest paid to the creditor unless the creditor would have been entitled to claim interest from the prin- cipal. Ex parte Houston, 2 Gl. & J. 36 ; Ex parte Wilson, 1 Kose, 137 ; Ex parte Sanderson, 8 D. M. & G. 849. — Ed. 380 HOTHAM V. STONE. [CHAP. IIL HOTHAM v. STONE. In Chancery, before Sir William Grant, M.R., 1809. [Reported in Turner Sf Russell, 226 n. (c).j On the 12th of August, 1774, John Pytt and John Piatt executed a joint and several bond to John Stock, conditioned for the payment of £1,000 and interest, and by a memorandum in writing, bearing even date with the bond, and signed by Pytt, it was declared that the name of Piatt was inserted in the bond as a securit}* for Pytt, and at his request, and that no part of the £1,000 was received by Piatt, and Pytt promised to indemnify Piatt against the bond and the interest thereof. In the month of August, 1775, John Piatt died, having by his will appointed the defendant Partridge to be his executor ; John Pytt died in August, 1776, and after his death the principal and inter- est due on the bond, amounting to £1,485, was paid by Partridge, to whom the bond was delivered up. By the decree in the cause it was amongst other things ordered, that the Master should inquire and state to the court the priorities of the respective incumbrances, annuities, and specialt}' debts, affecting the estates in question in the cause. The Master by his report, dated the 6th of December, 1809, set forth several instruments by which John Pytt became seized in fee of the estates in question, and stated, that the first incumbrance on the said estates was an annuity of £200 granted by the said John Pytt to the defendant Robert Stone, and that the second incumbrance thereon was a debt of £400 due to Richard Bowsher, by virtue of the said John Pytt's bond, dated the 10th of October, 1775 ; and after stating several other incumbrances affecting the said estates, the Master certified, that a state of facts had been carried in by Partridge, claiming to have the debt paid bv him allowed as the second incumbrance upon the estates in question, but that upon consideration of the claim he had disallowed the same, inasmuch as he humbly conceived that the said debt was not any charge or incumbrance upon the said estates. The defendant Partridge took an exception to the report, insisting that the Master ought to have allowed the claim as the second incum- brance on the estates. The decree declares, that the defendant Partridge is entitled to stand as the second incumbrancer upon the estates in question, and directs an account to be taken of what is due to him for principal and interest by virtue of the bond. 1 i Ex parte Crisp, 1 Atk. 133 (semWe).per Lord HakdwiCKE ; Robinson v. Wilson. 9 Mad. 464 \&>mble). Accord — Ed. SECT. I.J COPIS^. MIDDLETON. Q- 381 COPIS v. MIDDLETON. In Chancery, before Lord Eldon, C, July 1, 1823. [Reported in Turner Sf Russell, 224.] This suit was instituted by creditors for the administration of the estate of John Knott, who died on the 28th of December, 1792. The Master by his report, dated the 20th of May, 1815, certified, that the specialty debts of the said John Knott amounted to £16,085. In the schedule to his report the Master included the representatives of Newman, Knott and one John Martin, as- specialty creditors of the said John Knott, in respect of sums paid by the said Newman Knott and John Martin respectively, in discharge of the principal and interest of certain bonds entered into by them as sureties for the said John Knott, and he allowed interest upon such principal sums. The cause now came on upon exceptions to the Master's report. 1 The Lord Chancellor. The facts of this case are simply these, two individuals gave a bond, the one as principal and the other as surety ; no other assurance was executed at the time, no mortgage was made to secure the debt, no counterbond was given by the principal to the surety ; a nd the question to b e decide d is, whether the surety, ha v- i ng paid the bond after it was due, is a sim ple contract or a specialty creditor. I understand it to have been the opinion ol" "the Mastei^an opinion founded on one or two cases which have been stated, that the surety was to be considered as a specialty creditor to stand in the place of the person whom he paid ; that doctrine appears to me to be con- trary to all that has been settled during the whole time I have been in this court ; everything that was arranged in bankruptcy before the late statute enabling the surety to prove, everything determined before, appears to me to have authorized the court to consider it quite clear, that if there was nothing in the case beyond what I have stated, the surety having paid the bond could be nothing more than a simple con tract creditor in respect of that paym ent ; the bond was not assigned to anybody in consideration of a sum of money paid, which was one way we used to manage these things ; there was no counterbond given, which was another way in which we used to manage these things, so that if the surety paid one bond, he became instantly a specialty credi- tor by virtue of the other bond. If any suit was now instituted, I apprehend the payment of the bond would show that the bond was gone. There has been a case cited where, upon the general ground that a surety is entitled to the benefit of all securities which the credi- tor has against the principal, it seems to have been thought, that the surety was entitled to be as it were a bond creditor by virtue of the bond ; I take it to be exceeding!}' clear, if at the time a bond is given, a mortgage is also made for securing the debt, the surety, if he pays 1 The statement of facts is abridged, and the arguments are omitted. — Ed. \*$ Q 82 COPIS V. MIDDLETON. [CHAP. III. aj the bond, has a right to stand in the place of the mortgagee, and as the mortgagor cannot get back his estate again without a conveyance, that security remains a valid and effectual security, notwithstanding the bond debt is paid; but if there is nothing but the bond, my notion is, that as the law says that bond is discharge d by the p ayment of what was due upon it, the bond is gone, and cannot be~s et up. That is the opinion which I have formed of this case. Exceptions allowed. 1 [Statute 19 §• 20 Victoria, c. 97, § 5.] "Every person who, being surety for the debt or dut}* of another, or being liable with another for any debt or duty, shall pay such debt or perform such duty, shall be entitled to have assigned to him, or to a trustee for him, every judgment, specialty, or other security which shall be held by the creditor in respect of such debt or dut}', whether such judgment, specialty, or other security shall or shall not be deemed at ^aw to have been satisned 03' the payment of the deb t, or performance ' of the duty, and such person shall be entitled to stand in the place of the creditor, and to use all the remedies, and if need be, and upon a proper indemnit}', to use the name of the creditor in airy action or other proceeding at law or in equit3 - , in order to obtain from the prin- cipal debtor, or any co-suret}', co-contractor, or co-debtor, as the case ma3 T be, indemnification for the advances made, and loss sustained b3 T the person who shall have so paid such debt, or performed such dut3 - , and such payment or performance so made b3' such suret3 T shall not be pleadable in bar of aity such action or other proceeding b3' him : Pro- vided alwa3's that no co-surety, co-contractor, or co-debtor, shall be entitled to recover from any other co-suret3*, co-contractor, or co-debtor, b3 T the means aforesaid, more than the just proportion to which, as be- tween those parties themselves, such last-mentioned person shall be justly liable." 1 Jones v. Davids, 4 Russ. 277 ; Hodgson v. Shaw, 3 M. & K. 183 ; Foster v. Trus- tees, 3 Ala. 302, 308 (semble) (but see Knighton v. Curry, 62 Ala. 404, 410,411; Turner v. Teague, 73 Ala. 554, 557) ; Uzzell v. Mack, 4 Humph. 319, 320 (semble) ; Moore v. Campbell, 36 Vt. 261 ; Salkekl v. Abbott, Hayes, 576 (semble), Accord. In Salkeld v. Abbott, supra, in which case a surety in a recognizance who had paid the same was subrogated to the creditor's right on the recognizance against a co-surety, because not being satisfied of record it was not extinguished at law. Pennefather, B., said : " If the principal and surety join in a bond, and that bond be paid by the surety, the action may be pleaded in bar to an action at law. So, if a judgment have been entered on the bond and the amount of the judgment have been paid off by the surety, so that the judgment is thereby satisfied ; then, since the Statute of 6 Ann., c. 10, that payment may be pleaded by the principal, in bar of an action brought against him upon that judgment by any person whatsoever. In both these instances, the surety is but a simple contract creditor of his principal. Again, — in the case of a recognizance, — if the money secured by that recognizance have been levied under a writ of execution against the surety, so that, by the levy, the recognizance was discharged at law, then the surety cannot stand in the place of the crown, in order to reimburse himself. SECT. I.] IN RE M'MYN. 383 In re M'MYN. In the Chancery Division, August 4, 1886. [Reported in 33 Chancer)) Division, 575.] A further l question arose under the following circumstances : — The testatrix and her mother and others had signed a guarantee to certain bankers to secure an advance made to a relative. Default in payment having been made by the relative, an action was brought in 1877, and judgment was recovered b} r the bankers against the co- guarantors. The testatrix's mother, Alice M'Myn, had paid the judg- ment debt b}' instalments, and accordingly no further proceedings were taken by the bankers. She had not taken an assignment of the judg- ment. The question was whether the legal personal representatives of the mother (who was now dead) were entitled to be paid out of the tes- tatrix's estate, in priority to the other creditors, the amount of the con- tribution due from the testatrix. Hamilton Humphreys, for the plaintiff: — Levett, for the representatives of Alice M'Myn : — We are entitled to stand in the place of the judgment creditor. If nothing had been paid by the mother the judgment creditors would have had their whole debt paid out of the testatrix's estate in priority to the unsecured creditors. Our payment was not intended for the benefit of the testatrix's unsecured creditors, and by § 5 of the Mercan- tile Amendment Act, 1856 (19 & 20 Vict. c. 94), a surety who pays the debt is entitled to have a judgment held b}' the creditor assigned to him. Our priority in respect of the judgment is unaffected by the Judicature Act, 1875, § 10: In re Maggi. 2 Chitty, J. The representatives of Alice M'Myn have not them- selves obtained any judgment, and the question is whether in order to gain priority they should have obtained an assignment of the judgment. The Mercantile Law Amendment Act, 1856, § 5, is as follows: [His Lordship referred to the section.] I think effect should be given to the words of the section, which say that the surety ma\ r stand in the place and use the name of the creditor ; it follows that the co-surety, notwithstanding that she has neither brought an action nor had an assignment of the judgment, is entitled to obtain what she has paid in excess of her fair contribution, and to have priority over the unsecured creditors of the testatrix. That puts the unsecured creditors in no worse position than if the judgment creditors had exhausted their whole claim by enforcing it against the testatrix's estate. I therefore hold that the representatives of Alice M'Myn are right in their contention. 3 1 Only what relates to this question is given. — Ed. 2 20 Ch. D 545. 3 Re Cochran's Estate, 5 Eq. 209, Accord. — Ed. a— ^384 "V LIM)ERDALE 27. ROBINSON. -_ [CHAP. III. ^^ LIDDERDAEtES Executors Y. The Executor op. ROBINSON. "In the Supreme C ourt , United Stktes^n Janu ary 17, 1F27. Mr. Justice Johnson delivered the opinion of the court. The question to be decided in this cause is certified to tins court on a division of opinion from the judges of the Virginia district. 1 The bill is filed to recover a sum of money of Robinson's estate ; and the debts being numerous, and the assets probably insufficient to satisfy the whole, the right of priority becomes a material object among the creditors. The particular demand upon which this question is certified, is that of one Smith, who was joint indorser with Robinson, on a bill of ex- change drawn by one Roots, and returned under protest. The bill, of course, must have been drawn payable to Robinson and Smith, and being taken up by them, and the latter having paid more than a moiety in satisfaction of the debt, his administrator now claims of the estate of Robinson the amount by which Smith's payments exceeded the moiety. There is no question on his right to come in for that sum as a simple contract creditor; but he claims precedence, and the rank of a judg- ment creditor, under a particular provision of the laws of Virginia in force at Robinson's death, and under an equitable principle, according to which, he who pays a debt of a superior dignity is suffered to rank i n the~a*PpiicHtiOn"Of aSijeTs~ltccordlng to the dignity of the deBt satis- fied ; or, in other words, is substituted for the creditor who held the prior debt ." ~" The terms of the Virginia act are these, " All bills of exchange which are, or shall be protested, shall, after the death of the drawer or indorser thereof, be accounted of equal dignity with a judgment; and the executors or administrators of every such drawer or indorser, shall suffer judgment to pass against them for all debts due upon protested bills of exchange before any bond, bill, or other debt, of equal or inferior dignity, under the penalty of being obliged to pay the same out of their own proper goods." The priority, therefore, of the holder of the bill of exchange, as well against the estates of the indorsers, as the drawer, is "questionable ; but, the other creditors insist, th at as between the co-indorsers, the rights of Smith against the estate of Robinson, must be determined by the nature of the action to which he would have been put at law to recover back what he paid above his moiety, that is, assu mpsi t on sim- ple contract. l)iit both on principle and authority we are induced to think otherwise. 1 Reported in 2 Brock. 159. — Ed. >f A SECT. I.] LIDDERDALE V. ROBINSON. 385 What have the creditors of Robinson to complain of? The}' are only referred back to the situation in which they were before they were relieved by the application of Smith's funds to the payment of the bill of exchange. If the bill of exchange still remained in the hands of the holder unsatisfied, his right to a priority from Robinson's estate as to the moiety of the bill, would be unquestionable, and if relieved from that state b}- the money of Smith, it is but right that Smith should have refunded to him that su m which they, witho ut that pay- ment, would certainly have Deen obli ged to relinquish . This is in per- fect analogy with that class of cases in which real assets have been decreed to make good to simple contract creditors sums that have been taken from personal assets, and applied to relieve the real estate, 8 Vesey, 382, or to satisfy specialty creditors, Gibbs v. Onger. 1 That a surety who discharges the debt of the principal, shall, in gen- eral, succeed to the rights of the creditor, as well direct as incidental, /rfP^s£~-* is strongly ex emplified jnjh ose cases in which the sure ty is permi tted r xr to succeed to those rights, even against bail, who are themselves in many resp~ects regarded as sureties. 2 Vera. 608; 11 Vesey, 22. That such would be the effect of an" actual assignment made by the creditor to the surety, or to some third person for his benefit, no one can doubt. But, in the cases last cited, we find the Court of Equity lending its aid to compel the creditor to assign the cause of action, and thus to make an actual substitution of the sureties, so as to perfect their claim at law. This fully affirms the right to succeed to the legal standing of their principal ; and, after establishing that principle, it is going but one step farther, to consider that as done which the surety has a right to have done in his favor, and thus to sustain the substitu- tion without an actual assignment. And, accordingly, we find the dictum expressed in Robinson v. Wilson,' 2 in pretty general terms, ^ ' 4t that a surety who pays off a specialty debt shall be considered as a fl**^" creditor by special ty of his p rincipal." u ~TF the parties in this cause be considered as claiming under assign- ment from the holder of the bill, and each as assignee of the claim against his co-indorsee, according to the actual state of their respective interests, there can be no doubt of the priority here claimed. This subject has undergone a very serious examination in the courts of the United States, and in cases in which, as in this, satisfaction had been made by the surety without taking an actual assignment of the debt. . . . 3 That this, then, is the settled law of the State in which this contract and this cause originated, cannot be doubted. But we feel no inclina- tion to place our decision upon that restricted ground, since we are well satisfied with its correctness on a general principle, and on author- ities of great respectability in other States. 1 12 Vesey, 413. 2 2 Madd. Rep. 434. 8 The court here discussed the cases. Burrows v. McWhann, 1 De S. 409 ; Eppes v Randolph, 3 Call, 125, and Tinsley v. Anderson, 3 Call, 329. — Ed. 25 386 BANK OF SALINA V. ABBOT. [CHAP. IIL We will, therefore, order it to be certified to the Circuit Court of Virginia District, that John Smith, executor of John Smith, deceased, is entitled to satisfaction from the assets of the estate of John Robin- son, with the priority of a judgment creditor of the deceased. Certificate accordingly} THE BANK OF SALINA v. ABBOT and Others. In the Supreme Court, New York, June, 1846. [Reported in 3 Denio, 181. J I. Harris, on behalf of Joel Rathbone, moved for a perpetual stay of execution in this cause, in the hands of the sheriff of Erie Count}', and that the judgment be cancelled of record. The judgment was rendered September 3d, 1842, on a note made by Abbot to the order of W. Hodge, and endorsed b}' him and W. Hodge, Jr., for the accom- modation of the maker. P. Hodge purchased the judgment of the plaintiffs, and took an assignment of it, and afterwards, W. Hodge, Jr., one of the defendants and the last endorser on the note, purchased and took an assignment of the judgment from P. Hodge. Bathbone ob- tained a decree against W. Hodge, the elder, on the 6th da} - of October, 1842. The judgment and decree were both docketed with the clerk of P>ie County, in the same order in which the}' were entered. W. Hodge, Sr., has real estate in Erie County, which the sheriff has advertised for sale on the execution. The counsel of Rathbone maintained that the judgment was extinguished by the assignment thereof to one of the defendants. M. T. Reynolds, for W. Hodge, Jr. By the Court, Jewett, J. At law it is well settled, that payment of a judgment to the plaintiff or the owner, by the defendant, or by one 1 Subrogation to specialty claim against the principal. Mott v. Maris, 2 Wash. C. C. 196; Lumpkin v. Mills, 4 Ga. 343; Davis v. Smith, 5 Ga. 274 ; McDougald v. Dough erty, 14 Ga. 674 (semb/e) ; Braught c. Griffith, 16 Iowa, 21 ; Grider v. Payne, 9 Dana, 188 (semble) ; Schoolfield v. Rudd, 9 B. Mon. 291 ; Muldoon v. Crawford, 14 Bush, 125 (but see Justices v. Lee, 1 T. B. Mon. 247 and Buckner v. Morris, 2 J. J. Marsh. 121, contra); Orem v. Wrightson, 51 Md. 34 (semble) ; Crisfield v. State, 55 Md. 192 (semble) ; Felton v. Bissel, 25 Minn. 15, 19 (semble) ; Ferguson v. Carson, 86 Mo. 673, 679 (semble) ; Townsend v. Whitney, 75 N. Y. 425 (semble) ; Drake v. Coltran, Busbee, 300; Howell v. Beams, 73 N. Ca. 391 (but see Liles v. Rogers, 113 N. Ca. 196,200-201); Lathrop's App., 1 Barr, 512, 516 (semble) ; Burrows v. McWhann, 1 De S. 409 (co- surety) ; Lenoir v. Hunter, 4 De S. 65 ; Pride v. Boyce, Rice, Eq. 275 ; Shultz v. Carter, Speers, Eq. 533; Thomson v. Palmer, 3 Rich. Eq.'l39; Ex parte Ware, 5 Rich. Eq. 473 (Cunningham ». Smith, Harper, Eq. 90, contra, is virtually overruled) ; Eppes v. Randolph, 2 Call, 125 ; Tinsley v. Anderson, 3 Call, 329 ; Tinsley v. Oliver, 5 Munf. 419; Enders v. Brune, 4 Rand. 438 (semble) ; Powell v. White, 11 Leigh, 309 (but see Cromer v. Cromer, 29 Grat. 280, 285, limiting the rule in Virginia to cases of payment by the surety after the principal's death) ; Mason v. Piersou, 63 Wis. 239, 244-245 {sem- ble), Accord. — Ed. SECT. I.] BANK OF SALINA V. ABBOT. 387 of several defendants, extinguishes it, although sueh payment be made by a defendant who is a mere surety. 1 A court of law cannot substi- tute such surety in the place of the plaintiff, and allow him to take execution upon such judgment. 2 The judgment is regarded as extin- guished against all. Ontario Bank v. Walker. 3 An assignment by the plaintiff or owner of a judgment to one of several defendants in the judgment, works the same consequence. Motion granted.* 1 The doctrine of the principal case that the statute permitting a plaintiff to join in one action the successive parties to a bill or note, rendered the judgment against the defendants a joint judgment analogous to a joint judgment against co-obligors or co-makers, was overruled in Corey v. White, 3 Barb. 12. The judgment against suc- cessive parties to a bill is, therefore, to be regarded as the union of so many separate judgments. — Ed. 2 Morrison v. Marvin, 6 Ala. 797 ; Chollar v. Temple, 39 Ark. 238 ; Payne v. Mc- Kinney, 30 Ga. 86; Bonn v. Aiken, 35 Iowa, 534; Drefahl v. Tuttle, 42 Iowa, 177; Wilson v. Ridgely, 46 Md. 235 ; McDauiels v, Lee, 37 Mo. 204 ; Hull v. Sherwood, 59 Mo. 172; Ontario Bank v. Walker, 1 Hill, 652; Briley v. Sugg, 1 Dev. & B. Eq. 366; Fort Worth Bank v. Dougherty, 81 Tex. 301, Accord. But by the aid of Equity, or in some jurisdictions by statute, a surety who has paid a joint judgment against himself and others is permitted to issue execution thereon against the other judgment debtors, whether principals or sureties. Fearn v. Ward, 80 Ala. 555; Newton v. Field, 16 Ark. 216 (semble); Coffee v. Tevis, 17 Cal. 239; Harris v. Wynne, 4 Ga. 521 ; Davenport v. Hardeman, 5 Ga. 580; Burke v. Lee, 59 Ga. 165; Thomason v. Wade, 72 Ga. 160; Irby v. Livingston, 81 Ga. 281 ; Ezzard v. Bell, 100 Ga. 150; Scherer v. Schutz, 83 Ind. 543; Harris v. Frank, 29 Kas. 200; Morris v. Evans, 2 B. Mon. 84; Alexander v. Lewis, 1 Met. (Ky.) 407. (But see Veach v. Wickersham, 11 Bush, 261) ; Sprigg v. Beaman, 6 La. 59 ; Fluker v. Bobo, 11 La. An. 609; Counely v. Bourg, 16 La. An. 108; McKnew v. Duvall, 45 Md. 501 (semble); Swan v. Smith, 57 Miss. 54S ; Yates v. Mead, 68 Miss. 787 (semble) ; Wilson v. Burney, 8 Neb. 39 ; Edgerly v. Emerson, 23 N. H. 555 ; Brewer v. Franklin Mills, 42 N. H. 292; Durand v. Trusdell, 44 N. J. 597; Cuyler v. Emsworth, 6 Paige, 32 (semble) ; Alden v. Clark, 11 How. Pr. 211; Townsend v. Whitney, 75 N. Y. 425; Bank v. Harper, 8 Pa. 249 ; Richter v. Cummings, 60 Pa. 441 ; Duffield v. Cooper, 87 Pa. 443 ; Brown v. Black, 96 Pa. 482 ; Floyd v. Goodwin, 8 Yerg. 484 ; McNairy v. Eastland, 10 Yerg. 310. — Ed. 8 1 Hill, 652. 4 Where judgment has been obtained against a party to a bill or note, a subsequent party does not, by paying the amount and taking an assignment of the judgment, ex- tinguish it. Harger v. McCnllough, 2 Denio, 119, 122. So, it is presumed, if separate judgments were recovered by the holder against maker and endorser, the latter might pay the judgment against himself and take an assignment of that against the maker and enforce it by execution or otherwise. The principal case must therefore depend upor the effect of the joint judgment, which ordinarily extinguishes the precedent liabilities 1 upon which it was recovered ; and the provision in the act authorizing suits against different parties to a bill or note, which looked to preserving the rights of such parties as between each other, it seems, is not broad enough to meet the case. See Stat. J 839, p. 490, § 7. >88 cromer v. cromer's administrators. [chap, iil CROMER v. CROMER'S ADMINISTRATORS. In the Court op Appeals, Virginia, November 8, 1877. [Reported in 29 Grattan, 280.] On the 21st of April, 1845, Martin Cromer qualified as the guardian of Josephine Cromer, the daughter of Joseph Cromer, in the count}- court of Rockingham, gave bond in the penalty of $6,000, with said Joseph Cromer and others as his sureties. Afterwards the ward, Josephine Cromer, intermarried with J. F. Ritchie, and on the 19th January, 1869, Joseph Cromer, her father, and one of the sureties as aforesaid, paid to Ritchie $4,000 as a part of the amount due by the guardian, Martin Cromer, to his said ward. After the death of said Joseph Cromer March 26, 1873, his administrators instituted their action of assumpsit to recover the said $4,000, with interest from the day of payment, from said Martin Cromer. The plaintiffs, in their declaration, include several counts, and present prominently the relations between the parties and the character in which the sum of money was paid by their intestate. To this action Martin Cromer pleaded in bar his final dis- charge in bankruptcy from the district court of the United States for the western district of Virginia, dated May 14, 1874. To which the plaintiffs replied " that their intestate, in his lifetime, paid said sum of money as surety for the defendant, Martin Cromer, in a fiduciary bond due from him as guardian of Josephine Cromer, the wife of J. F. Ritchie, in the payment of which the defendant, Martin Cromer, had made de- fault, and that said liability was excepted by the bankrupt law from the operation of a discharge in bankruptcy." To this replication the defendant, Martin Cromer, demurred, but the demurrer was overruled. 1 Burks, J., delivered the opinion of the court. There can be no doubt that the debt which the guardian owed to his ward was a fiduciary debt within the meaning of the act, and if it had been unpaid at the time of the commencement of the proceedings in bankruptcy by the guardian, it would not have been affected by his discharge. But it was not unpaid at that time. It had been full}' paid to the ward, and the guardian discharged from any and all liability to the ward for it. True it is, his surety paid it for him. This matters not. As soon as the debt was paid to the fiduciary creditor, the guar- dian ceased to be a fiduciary debtor. He became at once debtor by simple contract to the surety ; not debtor as guardian, but in his indi- vidual character. There is no fiduciary relation (of necessity) between principal and surety. Carr, J., in Blow v. Maynard. 2 When the surety becomes liable for the principal at his request, there \& an implied promise on the part of the latter to repay the surety any 1 The statement is abridged, and a portion of the opinion is omitted. — Ed. 2 2 Leigh, 41. SECT. I.] HILL V. KING. 389 money which he may be compelled to pay for the principal on account of such liabilit}'. For the recovery of the money so paid, and when paid, the surety has his remedy by action at law, and under some circum- stances, b} - bill in equit}-. Among his equitable remedies is that of subrogation to the securities of the creditor, to whom he has paid the debt. These, though extinguished at law by the payment made by the surety, are generally revived in equity for the surety, and may there, by him, be enforced for his indemnity. But it is not every security which may be thus revived and enforced. A bond on which principal and surety are both bound, once paid by the surety in the lifetime of the principal without assignment by the creditor, or agreement to assign, is forever dead as a security as well in equity as at law. There can be no subrogation in such a case. Powell's ex'ors v. White and others; 1 Kendrick and al. v. Forney. 2 It is plain enough from the pleadings and proofs in this case that the debt in suit was a debt provable against the bankrupt's estate ; was not a debt created by the bankrupt "while acting in a fiduciary character," and therefore not excepted from the operation of the bank- rupt's discharge. It follows that the plaintiff's special replication to the defendant's plea of discharge was not sufficient in law, and the court is therefore of opinion that the circuit court erred in overruling instead of sustaining the demurrer of the defendant to said replication. Judgment reversed. 3 HILL v. KING, Executor. In the Supreme Court, Ohio, January 13, 1891. [Reported in 48 Ohio State Reports, 75.] Minshall, C. J. 4 Robert Hill, the plaintiff in error, was, with others, a surety upon certain bonds given by B. F. Stahl as admin- istrator of the estate of Henr} 7 Deibert, deceased. Stahl becoming insolvent, suit was brought upon the bonds by the several beneficiaries, who, at the October Term, 1881, of the court of common pleas, recov- ered judgments against him and his sureties for the several amounts due them, amounting in all to some $1,200. Executions were at once issued, but were returned January 11, 1882, without levy, by reason of the commencement of proceedings in error in the district court. 1 11 Leigh, 309, 324. 2 22 Gratt. 748. 3 In Giddens v. Williamson, 65 Ala. 439, a surety said in 1874 a joint judgment obtained in 1866 against himself and his principal. By the principle of subrogatiou he was enabled to obtain satisfaction from the principal, which he could not have obtained if he had proceeded upon an implied contract of the principal to indemnify him. — Ed. 4 Only the opinion of the court is given. — Ed. 390 HILL V. KING. [CHAP. III. The judgments having been affirmed, executions were again issued, April, 1885, whereupon Hill, to avoid the sale of his own propert}', paid one half of the judgments, $906.03, Waddle, a co-surety, paying the other half. The lands of Stahl, owned b} T him at the recovery of the judgments and subject to their liens, were conveyed by him on July 29, 1882, to one Thomas O'Day, who executed a mortgage on them to secure the notes given to Stahl for the purchase-money. The mortgage was duly recorded at the time. Afterwards Stahl sold and transferred the notes and mortgage to one Hopkins, who sold and transferred them to Julia King. Julia King having died, suit was brought hy her administrator in 1886 to foreclose the mortgage. To this suit Hill was made a party ; and answered, setting up b} T way of cross-petition, the recoveiy of the judgments against him as before stated in 1881, the payment made by him on the judgments in April, 1885, and claiming the right to be sub- rogated to the liens of the judgments so paid as against the mortgage held by the plaintiff's decedent. The case was tried in the Circuit Court on Appeal, which found that, as a matter of fact, King was the surety of Stahl on the bond, but that he had not been certified as such in the record of the judgments, and dismissed his answer and cross- petition. The only question in the case is, whether the omission of the fact of his suretyship in the record of the judgment deprives Hill of the right to be regarded as subrogated to the place of the judgment creditors, for the amount paid by him upon the judgment against him and his prin- cipal. And unless, as seems to be claimed, the right of the surety on payment of the judgment to the place and remedies of the creditor is, by the provisions of § 5836, Revised Statutes, made to depend upon his being certified as such in the record of the judgment, there can be no doubt that, according to the settled rules of equity and the decisions of this court, it does not. 1 The rule is that so soon as the surety pays the debt of his principal there arises in his favor an equity to be subrogated to all the rights, remedies, and securities of the creditor, and he has the right to enforce them against the principal for the purpose of his indemnification. Whilst payment by the surety discharges the debt and extinguishes all the securities so far as concerns the creditor, such is not its effect as between the principal and the surety and all who stand in the shoes of the former ; as to these, it is in the nature of a purchase b}' the surety from the creditor, and operates as an assignment of the debt and securities to the surety. And, if a question is made whether the acts of the surety have been such as to keep the security on foot, the court, in the absence of evidence to the contrary, will presume that they were done with that intention which is most for the benefit of the part}' doing them. Sheldon on Subrogation, § 87 ; 3 Pom. Eq. 1 The court decided that the remedy given by § 5836, Revised Statutes, was merely cumulative. The opinion on this point is omitted. — Ed. SECT. I.] HILL V. KING. 391 Juris., § 1419 and note 1 ; Brandt on Suretyship, §§ 270, 273 ; Burge on Suretyship, 348. The doctrine, in its application to the relation of principal and surety, is so equitable and just, that there seems to be an entire consensus in the views of authors and courts upon the subject. And in no court has it been more fully recognized and applied than in our own. Neilson v. Fry ; 1 Dempsey v. Bush ; 2 Neai v. Nash. In Dempsey v. Bush, it is announced in the syllabus that, " A surety against whom and his principal judgment has been recovered, has the right, in equity, on paying the amount due on the judgment, to be sub- rogated to the rights of the judgment creditor in the judgment ; and this right of the surety will not be defeated by the fact that there was no stipulation therefor by the surety at the time of making the pay- ment, nor by the fact that he was at the time ignorant of the existence of such right." The case is very much like the present one. The judg- ment to which the sureties were subrogated by payments made in 1864 and 1865, was obtained against them and their principal by the execu- tors of Ross in 1859. And the mortgage, against which they were given priority by subrogation to the rights of the judgment creditor, was executed in 1861 ; that is, after the recovery of the judgment, but before its payment by the sureties. And it is said in the statement of the case, that the payments were made without any agreement between the executors and the sureties, except that they were in full of the judgment ; and without an}' intent on the part of the sureties either to assert or to abandon an}' supposed right of subrogation, and without any knowledge on their part of the existence of such right, although intending to assert all their rights in the premises. Whether the sure- ties had been certified as such in the judgment is not stated ; it is prob- able they were not ; but if they were, no prominence was given to the fact in the opinion of the court. The right of the sureties to be subro- gated was placed on the ground that the}- had paid the judgment. Judgment reversed, and judgment for Hill on his cross-petition.* i 16 Ohio St. 552. 2 18 Ohio St. 376. 3 A surety paying a joint judgment against himself and others, is subrogated in equity to the judgment creditor's lien upon the land of his co-obligors, whether prin- cipals or sureties. Reber v. Gundy, 13 Fed. Rep. 3.3 (co-surety) ; Bragg v. Pafterson, 85 Ala. 233 (statutory; compare Sanders v. Watson, 14 Ala. 198); Hardcastle v. Coram. Bank, 1 Harringt. 374 n. (a) ; Chandler v. Higgins, 109 111. 602; Johnston v. Belden, 49 Iowa, 301 ; Hollingsworth v. Pearson, 53 Iowa, 53 ; Searing v. Berry, 58 Iowa, 20 ; Furnold v. Bank, 44 Mo. 336 (co-surety) ; Beune v. Schnecko, 100 Mo. 250; Harper v. Rosenberger, 56 Mo. Ap. 388 ; Harper v. Kemble, 65 Mo. Ap. 514 ; Cauthorn v. Berry, 69 Mo. Ap. 404; Smith v. Rumsey, 33 Mich. 183; Baily v. Brownfield, 20 Pa. 41 (semble) ; Scott's App., 88 Pa. 173 ; Ward's Est., 100 Pa. 289 ; Boltz's Est., 133 Pa. 77 ; King v. Aughtry, 3 Strob. Eq. 149 ; Mason v. Pierron, 63 Wis. 239, 69 Wis. 585 (semble) ; German Bank v. Fritz, 68 Wis. 390 (co-surety). The subrogation will prevail also, as in the principal case, against a grantee of the principal or co-surety by a conveyance subsequent to the judgment, but prior to its payment by the surety. Perrin v. Higgins, 101 Ind. 178 (but see Thomas v. Stewart, 117 Ind. 50) ; Dempsey v. Bush, 18 Oh. St. 376 ; Garvin v. Garvin, 27 S. Ca. 472 ; Mo SP2 SMITH ET ALS. V. SWAIN ET ALS. [CHAP. III. J. SMITH and Others v. W. R. SWAIN and Others. In the Court of Appeals, South Carolina, November, 1854. [Reported in 7 Richardson, Equity Cases, 112.] Dargan, Cli. 1 The only remaining controversy in the case relates to the right of John Williams to be admitted as a creditor of William Swain in the distribution of the fund in question. The uncontroverted facts are as follows : Williams was the surety of William Swain on a single bill, payable to John Smith for three hundred dollars with inter- est from the 29th of January, 1841. Swain, the principal, left South Carolina, and became a resident in another State. After his departure the surety, John Williams, was sued upon the sealed note, and judg- ment was recovered against him. He subsequently paid the debt, and this constitutes the basis of his claim. To this claim, the other credi- tors of William Swain (the absent debtor) have set up the plea of the statute of limitations. This they have a right to do, as the}' now are alone interested in the fund, if the facts are sufficient to support that plea. The claim is certainly barred, unless it falls within some of the exceptions of the statute, or the evidence makes it a case to which the statute does not apply. As the original debt was secured by a sealed instrument constituting it a specialty, the Chancellor who tried the cause, considered that the surety who paid it, had a right in equity to be so far subrogated to the rights of the original creditor, as to set it up as a specialty against his principal, — thus making a case to which the statute has no applica- tion. In this view of the case I concur with the Chancellor. The circuit decree is affirmed and the appeal is dismissed. Johnston and Wardlaw, CC, concurred. Decree affirmed? Clung v. Beirne, 10 Leigh, 394; Buchanan v. Clark, 10 Gratt. 164; and a fortiori against an intermediate judgment or attaching creditor. Manford v. Firth, 68 Ind. 83 ; Goodyear v. Watson, 14 Barb. 481 ; Fleming v. Beaver, 2 Rawle, 128 (co-surety) ; Watt v. Kinney, 3 Leigh, 272. — Ed. 1 Only a portion of the opinion is given. — Ed. 2 Sparks v. Childers (Indian Territory, 1898), 47 S. W. R. 316; Morrison v. Page, 9 Dana, 428, 433 (but see Joyce v. Joyce, 1 Bush, 474) ; Hull v. Myers, 90 Ga. 674 (qualifying Ware v. Bank, 59 Ga. 846); Partee v. Mathews, 53 Miss. 140; Kinardr. Baird, 20 S. Ca. 377, Accord. — Ed. SECT 1.1 HARRAH V. JACOBS. 393 HARRAH v. JACOBS. In the Supreme Court, Iova, May Term, 1888. [Reported in 75 Iowa Reports, 72.] Rothrook, J. 1 It appears from the averments of the petition that the plaintiff and the defendant executed a promissory note to a corpo- ration known as the " Jasper Co-operative Association." The note is in these words: ''Newton, Iowa, September 4, 1878. For value re- ceived, on or before January 1, 1881, I promise to pa}* the Jasper Co- operative Association two hundred dollars, with ten per cent interest thereon from January 1, 1878, until paid. A. D. Jacobs, A. L. Harrah." Harrah executed the note as surety for Jacobs. On the twentieth da}* of November, 1880, the said corporation sold all its stock to the plaintiff. The contract of sale was as follows : " That we agree to sell our stock to A. L. Harrah, as shown on the secretary's book at the close of 1879, and ten per cent thereon for the year 1880 ; the said Harrah to take all debts to the association, and to assume and pay all liabilities of the association." The corporation was dissolved, anu ceased to exist as a corporation. Plaintiff claims that by purchasing the stock he became the owner of the note in suit ; that the transaction was a purchase of the note, and not a payment. The action was com- menced more than five years after the alleged purchase of the note from the corporation. The demurrer was to the effect that the plaintiff cannot maintain an action on the note because it was paid and discharged, and that, hav- ing paid and discharged the note as surety, the right to recover of the defendant the money paid is barred by the Statute of Limitations. It is very clear that, if the plaintiff can recover at all, it must be upon the note. No action can be maintained in the usual form of au action by a surety against his principal for money paid in discharge of the note, because more than five years elapsed between the time of the payment and the commencement of the suit. It will be observed that the rela- tion of principal and surety does not appear from the instrument itself. If the relation exists, it must be established by parol evidence. The light of action would therefore be founded upon an unwritten con- tract, and under our statute would be barred in five years. Lamb v. Withrow. 2 The plaintiff insists that his transaction with the corporation amounted to a purchase of the note, and not a payment. The same theory was claimed in the cases of Lamb v. Withrow, 2 and Bones v. Aiken, 8 and 1 Only the opinion of the court is given. — Ed. 2 31 Iowa. 164. 3 35 i owa# 534> 394 XEAL V. NASH ET AL [CHAP. Ill Johnston v. Belden. 1 It is true that in all the cited cases the obli°-a- tions had been reduced to judgments. But the principle involved is the same. It is that a joint maker of a note, who is in fact surety, is not entitled to recover, by purchasing a note or a judgment rendered upon it, either upon the note or judgment. It makes no difference whether he calls the transaction a purchase or a payment. His action is one for indemnity for the money paid. It is not an action upon a written contract, and is barred in five years. Such appears to be the rule of the cases above cited. We think the demurrer to the petition was properly sustained. Affirmed* HENRY H. NEAL v. SIMEON NASH and Another. In the Supreme Court, Ohio, December Term, 1872. [Reported in 23 Ohio State Reports, 483.] Day, J. 3 Two questions are presented : Are the facts stated in the petition sufficient to constitute a cause of action ; and if so, is the ac* tion barred by the Statute of Limitations? The case, in substance, is this : Gilman recovered a judgment against Nash and Neal, and it was certified therein that Neal was surety. To protect himself, Neal paid Gilman the amount of the judgment, with the understanding that it should remain in force and be assigned to him, and the assignment was made accordingly. It is claimed that this transaction extinguished the judgment ; and cases are not wanting to sustain that view of the case. But, however it may be as a technicality of law, it is settled in this State that it may- be regarded as still subsisting in equity, and that a surety, who has paid a judgment under such circumstances, ma} - sustain an action to be substituted in the judgment, in the place of the creditor, to enforce it against the principal, and, if dormant, to revive it also for that pur- 1 49 Iowa, 301. 2 Vanderveer v. Ware, 65 Ala. 606 (semble) ; Junker v. Rush, 136 111. 179 ; Gieseke v. Johnson, 115 Ind. 308, 311 (semble) ; Kreider v. Iseubice, 123 Ind. 10 (see Hopewell v. Kerr, 9 Ind. Ap. 11) ; Lamb v. Withrow, 31 Iowa, 164; Wilson v. Crawford, 47 Iowa, 469 ; Johnston v. Belden, 49 Iowa, 301 ; Preston v.^Jould, 64 Iowa, 44 ; Dunton v. McCook, 93 Iowa, 258 (semble) ; Buckner v. Morris, 2 J. J. Marsh. 121 ; Singleton v. Townsend, 45 Mo. 379; Sherwood v. Collier, 3 Dev. 380 (unless payment is by a stranger who takes an assignment from the creditor as trustee for the surety) ; Bledsoe v. Nixon, 68 N. Ca. 521 ; Rittenhouse v. Levering, 6 W. & S. 190 ; Faires v. Cockerell, 88 Tex. 428 (overruling Sublett v. McKiuney, 19 Tex. 438), Accord. In Illinois, Mississippi, and Pennsylvania, the right of subrogation to the original obligation is barred by the same period that bars an action at law on the collateral contract of indemnity or contribution. Junker v. Rush, 136 111. 179 ; Simpson v. Mc- Phail, 17 111. Ap. 499; Magee v. Leggett, 48 Miss. 139; Rittenhouse v. Levering, 6 W. &S. 190. — Ed. 3 Only the opinion of the court is given. — Ed. SECT. I.] NEAL V. NASH ET AL 395 pose. Neilson v. Fry ; 1 Dempsey -v. Bush. 2 The petition, then, makes a good cause of action. Is the action barred by the Statute of Limitations ? It appears that more than six and less than ten years elapsed, after the payment by the surety to the creditor, before the action was brought. By the code, actions on implied contracts are limited to six years, and actions for equitable relief to ten years. If the case falls under the former limita- tion it is barred, otherwise it is not. It is claimed that the surety's equitable action, to be subrogated in the judgment in the place of the creditor, is subject to the limitation applicable to an action by him against the principal, upon his implied promise to refund money paid for his use, which is six years; and this is claimed upon the authority of Neilson v. Fry. 1 But in that case, suit was brought by one of several co-sureties in a judgment, paid by him, against the other sureties, for contribution of their proportionate share of the amount paid, and to be subrogated to the rights of the creditor in the judgment. The action was essentially for the recovery of money upon an implied promise ; and, inasmuch as the judgment had been satisfied, without any ground of equitable relief other than the payment of the judgment, and such relief could not be invoked until facts were proved to warrant a recovery against the co- sureties upon the implied promise arising between them upon payment by one, it was held that the limitation of six years applied. This was mainly on the ground that the action was for a recovery against the co- sureties on an implied promise, and not merely for equitable relief against the creditor and principal debtor ; and, as that was the nature of the action, the period of limitation was determined by it. But it was conceded in that case, ' ' that an action merely for subro- gation is an action for equitable relief, and falls under the limitation of ten years." It was, moreover, admitted that " if the judgment had been kept alive, either b} T voluntary assignment of the creditor, or b}' a decree in equity against him, the case would have been wholly different." This is an action for equitable relief merely, and the judgment was " kept alive," so far as possible, bj r an agreement that it was not to be satisfied, but should remain in force, and it was assigned by the cred- itor to the surety. No doubt it would have been kept alive had the assignment been to a trustee for the benefit of the surety. That, how- ever, would have been a difference in form rather than in substance. In either case the surety would, in equity, have been the owner of the judgment ; and, in either case, the supposition of the extinguishment of the judgment, not its subsistence, would have been the " fiction." Surely the position of the principal, whose duty it is to pay his own debt, can derive no equitable aid because his surety holds the assign- ment in his own name instead of that of a trustee. But it is enough to know that according to the settled law of this 1 16 Ohio St. 552. 2 18 Ohio St. 376. 396 NEAL V. NASH ET AL. [CHAP. m. State, the judgment was not so extinguished, in equity, as to prevent the surety from being subrogated to all the rights of the creditor in the judgment itself. This is all that is invoked. A judgment on a con- tract, expressed or implied, is not sought ; nor is the relief sought based on a contract as the ground of an original recovery, but it rests merely on the just right of the surety to a judgment already existing. The action is grounded on the equitable right of the surety, whether by as- signment of the creditor or by subrogation merely, to stand in the shoes of the creditor in the judgment against his principal, and in the place of the creditor, to enforce it against him. The action is brought to assert this equitable ownership of the judgment, and, being dormant, to revive and enforce it in favor of the party justly entitled to it. The action, therefore, being purely equitable in its character, and not seek- ing a recovery on an implied contract, is not controlled by the limita- tion of six years. Since then the action is not barred by the Statute of Limitations, and may be sustained without the aid of the act of March 19, 1868 (S. & S. 744), it becomes unnecessary to consider further the effect of that act in connection with this case. At most it is but a statutory remedy for what otherwise could be attained only by the civil action of the code, in the nature of a proceeding in equity. The surety's remedy of subrogation and revivor, by action, is barred in ten years ; whether any of the statutory periods of limitation apply to the remed\* now af- forded to the surety, by a statutory revivor of a judgment in his favor against the principal, is a question not involved in this case ; for it may be regarded, as before stated, as a civil action, independent of the statute. With these views of the case, we are constrained to hold that the Court of Common Pleas erred in sustaining the demurrer to the peti- tion. The judgment must therefore be reversed and the demurrer overruled ; and, as the demurrant ma} - desire to answer, the cause will be remanded to that court for further proceedings. 1 1 Peters v. McWilliams, 36 Ohio St. 155, Accord. Junker v. Rush, 136 111. 179 ; Simpson v. MePhail, 17 111. Ap. 499 ; Fink v. Mahaffv, 8 Watts, 384; Rittenhouse v. Levering, 6 W. & S. 190; Allegheny Co. i;. Dickey, 131 Pa. 86; Barnes u. Dickey, 25 W. N. C. (Pa.) 168, Contra. See Bushnell v. Bushnell, 77 Wis. 435, 438. — Ed. SECT. I.] CARPENTER V. MINTER. 397 J. C. CARPENTER v. T. A. MINTER. In the Supreme Court, Texas, December 21, 1888. [Reported in 72 Texas Reports, 370.] Appeal from Wise. Tried below before Hon. E. F. Piner. The appellant (plaintiff below) sued appellee (defendant below) to recover a sum of money which the former had paid as surety for the latter. Plaintiff alleged that on the tenth day of August, 1885, defend- ant executed a note to Henry Greathouse for $306, due at twenty days, bearing twelve per cent per annum from maturity ; that plaintiff signed the note with defendant as principal, but was in fact only a surety for defendant ; that by the execution of the note defendant and plaintiff became bound to pay the principal and interest thereon at maturity, and ten per cent attorney fees on the amount in case the note was not paid at maturity, making a total of $336.60 ; that after the maturity of the note plaintiff paid off and satisfied the note in full to the payee. It is then alleged that defendant became liable to pay plaintiff $336.60, being the amount actually paid out for defendant b\ - plaintiff, including the ten per cent attorney fees provided for in case the note was not paid at maturity, which sum defendant has wholly failed to pay, etc. The note is made an exhibit to the petition, it is an ordinary prom^ issory note for $306, due in twenty days, bearing twelve per cent inter- est per annum from maturity, with the following stipulation : "In case of nonpayment of the above note at maturity we hereby authorize any licensed attorney at law to appear for us in court and accept service, waive process, and confess judgment in favor of the legal holder of said note against us for the amount of said note and interest, with ten per cent attorney fees additional." The note is signed by plaintiff and defendant. Plaintiff sued out an attachment, the affidavit for which avers that the amount due by defendant is $336.60, etc. Defendant moved to quash the attachment " because the affidavit for attachment . . . sets forth an indebtedness of $336.60, while the peti- tion . . . shows an indebtedness of onl}' $306." The court sustained the motion to quash, to which ruling the plaintiff excepted in form. The court rendered judgment for plaintiff for $328.95, and plaintiff appealed and assigned error in the ruling of the court in quashing the attachment proceedings because the petition claimed the same amount as was claimed in the affidavit, and hence there was no variance. 1 Collard, Judge. This case must be reversed. There was no vari- ance in the affidavit for attachment and the petition. The affidavit claimed that $336.60 was the amount justly due the plaintiff. The petition claimed by its allegations the same amount, and the exhibit attached to the petition did not show that a less amount was due. 1 The arguments of counsels are omitted. — Ed. 398 WALDRIP V. BLACK. [CHAP. Ill It is true the petition alleged that the attorney fees were to become due on maturity of the note, and the note filed as an exhibit to the petition only allowed attorney fees in case of suit by the payees ; but the surety paid the note on rnaturit}-, and then brought suit against his principal, the maker. This of course he had the right to do, and his right to sue was on the note itself. The error of the court below was in finding that the surety could only sue for the amount that appeared to be due on the note at the time it was paid by the surety without suit by the payee. This was incorrect. The surety having paid the note was subrogated to all the rights of the payee, that is to sue on tbe note and recover the same amount the payee could have recovered by suit. The right of the surety after pa3*ment of his principal's note was not on the implied assumpsit for the amount paid, but to sue on the note itself. The pa}'ee by suit could have recovered the principal and interest and ten per cent attorney fees on the amount. Worsham v. Stevens. 1 The surety could by suit on the note recover the same judgment. The note was not extinguished by the surety's payment. Tutt v. Thornton. 2 An inspection of the petition and the exhibit does not show that the attorney fees were not due, but that they were due plaintiff below. There was no variance between the petition and the affidavit for attachment. The cause should be reversed. Reversed and remanded? J. WALDRIP, Respondent, v. S. N. BLACK, and Another, Appellants. In the Supreme Court, California, December 23, 1887. [Reported in 74 California Reports, 409.] Foote, C. 4 This is an action which was instituted for the purpose of foreclosing a mortgage against S. N. Black and Julia A. Black. It appears from the record that the mortgage was executed by the Blacks in favor of Waldrip, to secure him harmless against having to* pay a joint note for three hundred dollars, which the two Blacks and Waldrip had signed as joint makers in favor of one Logsdon, or order, due three months after its date, and bearing interest at one per cent per month until paid. The Blacks, for whom he had become surety, were bound to reimburse 1 66 Texas, 89. 2 57 Texas, 35 ; Sheldon on Subrogation, § 86. 3 Josselyn v. Edwards, 57 Lid. 212 ; Beville v. Boyd (Texas Civil Appeals, 1897), 41 S W. R. 670, 42 S. W. R. 318, Accord. Gisseke v. Johnson, 115 Ind. 308 (semble) ; Faires v. Cockerell, 88 Tex. 428, 434 (semble) ; Cleveland v. Carr (Texas Civil Appeals, 1897), 40 S. W. R. 406, Contra. — Ed. 4 Only what relates to the point of interest is given, — Ed. SECT. I.] WALDRIP V. BLACK. 399 Waldrip for what he had been obliged to pay on account of their failure to pay the note, as they promised to do. Having never been, in reality as to the Blacks, a maker of the note, but a mere surety, upon his being compelled to make payment to Logsdon of what was due upon it, he be- came the equitable assignee of the note, it being the principal undertak- ing, and entitled to enforce its payment according to its tenor and effect, as the holder thereof, as well as to foreclose the mortgage, which was? the collateral security. (3 Fomeroy's Eq. Jur., sec. 1419, note 1; Cottrell's Appeal; 1 Lidderdale v. Robinson 2 ). Chief Justice Marshall, in the case last mentioned, tersely yet most forcibly says : " When a person has paid money for which others were responsible, the equitable claim which such payment gives him on those who were so responsible shall be clothed with the legal garb with which the contract he has dis- charged was invested, and he shall be substituted, to every equitable extent and purpose, in the place of the creditor whose claim he has dis- charged." (See also Ellsworth v. Lockwood. 3 ) We are of opinion that the mortgage sought to be foreclosed was not void for uncertainty. But it does not necessarily follow, from the proposition of law just cited as authorit}', that the person who has paid his mone}' for which others are responsible should, in this case, although " clothed witli the legal garb with which the contract he has discharged was invested," be allowed to be reimbursed to any greater extent than the amount, principal, and interest he has been obliged to pay out, together with legal interest upon the gross sum so paid out from the date of its payment. In other words, it does not follow, in this case, that because the surety can recover, according to the terms of the note, the principal and interest he actually paid out, that he can also recover, from and after the time of his payment of that sum, one per cent per month interest as provided in the note ; he is simply entitled to recover the legal rate of interest upon the whole sum of money he has paid out from the date of that payment. It would appear, therefore, that the judgment should be so modified as that it be reduced by the sum of $17.13, which is the excess of interest allowed by the court over and above what was legally due on the thirty- first day of December, 1886, the date of the rendition of that judgment. In all other respects the judgment and order should be affirmed. Hayne, C, and Belcher, C.C., concurred. 4 i 23 Pa. 294. 2 2 Brock. 159. 8 42 N. Y. 93, middle of page, and numerous cases there cited. 4 Smith v. Johnson, 23 Cal. 63 : Stanley v. McElrath, 86 Cal. 449 (accommodation, indorser vs. maker) ; Bushong v. Taylor, 82 Mo. 660 : Frevert v. Henry, 14 Nev. 191 ; Faires v. Cockerell, 88 Tex. 428, 437 (semble) ; Bushnell v. Bushnell, 77 Wis. 435 {sei?ible). Accord. Goodwin v. Davis, 15 Indiana Ap. 120; Pickett v. Bates, 3 La. An. 627, Contra. — Ed. 400 PRAY V. MAINE. [CHAP. III. JOSHUA PRAY v. SEBEUS C. MAINE. In the Supreme Judicial Court, Massachusetts, March Term, 1851. [Reported in 7 dishing, 253.] This was an action of assumpsit. The defendant filed in set-off a promissory note for $100, payable to Chandler & Maine, or their order, signed by the plaintiff, and indorsed " Chandler & Maine to Wingate," underneath which indorsement appeared the name of " Andrew T. Win- gate," erased. At the trial in the Court of Common Pleas, before Perkins, J., it appeared that the signature of Andrew T. Wingate, mentioned in the indorsement, was put on the note for a good consideration, at the time that the note was signed by Pray, and before it was delivered to Chand- ler & Maine ; to whom it was given for the purpose of securing the pay- ment of expenses incurred and services performed by them as attorneys in relation to the proceedings upon an application for the benefit of the insolvent laws, which Pray was about to make. Wingate afterwards paid $81 in full of said services and expenses, and Chandler & Maine thereupon surrendered the note to him. and made the indorsement above mentioned. At the time the note was made, Wingate owed Pray $100, $50 of which he had since paid ; so that after he had paid the $81 to Chandler & Maine, Pray owed Wingate $31. Wingate then sold and delivered the note to Maine for $31, without indorsing it. The judge, at the request of the plaintiff, ruled that the defendant could not avail himself of this note in set-off to the plaintiff's demand, to which ruling the defendant excepted. Joel P. Bishop, for the defendant. F. W. Sawyer, for the plaintiff. Shaw, C. J. No title is shown b}- the defendant to the note relied upon as a set-off. Wingate, though he put his name on the back of the note, was still a promisor to Chandler & Maine, as settled in Hunt v. Adams. 1 The note was therefore extinguished, by payment by a prom- isor, who could not again put it in circulation as against a co-promisor. The only right that Wingate derived, or could derive, from the payment thus made by him as surety and co-promisor, was to claim the amount of Pray for money paid at his request, and for his use, and that right was not negotiable. Exceptions overruled* & i 5 Mass. 358, and 6 Mass. 519. 2 Fitch v. Hammer, 17 Colo. 591 (surety not entitled to attachment which creditor would have had as holder of note— note assigned to surety) ; Swem v. Newell, 19 Colo. 397 (note assigned by holder to surety) ; Chappell v. McKeough, 21 Colo. 275 (semble, note assigned to surety) ; Crisfield v. State, 55 Md. 192 (uo action at law, but in equity) . Dillenbach v. Dygert, 97 N. Y. 303 (surety co-maker pays payee and transfers to A. A cannot sue co-surety on note, but only as assignee to enforce assignor's right of SECT. I.J WRIGHT V. GROVER AND BAKER S. M. CO. 401 WRIGHT v. GROVER & BAKER S. M. CO., to use op SMITH. In the Supreme Coukt, Pennsylvania, May 9, 1876. [Reported in 82 Pennsylvania Reports, 80. j R. H. Wright as principal, and Samuel Smith and Charles Wright as sureties, executed three notes in the following form : — " $275.00. New Bloomfield, February 27th, 1873. "Six months after date, for value received, we or either of us promise to pay to Grover & Baker S. M. Co., two hundred and seventy-five dollars, with interest and without defalcation or stay of execution. And we do hereby confess judgment for the above sum with interest and costs of suit, a release of all errors, and waiver of all rights to inquisition and appeal, and to the benefit of all laws exempting real or personal property from levy or sale. R. H. Wright, [seal.] "Witness, H. W. Teckmeyer. Samuel Smith, [seal.] Charles Wright, [seal.]" On the first note Smith claimed $137.50 as due from Wright as co-surety; on the second $54 ; and on the third $12.37, respectively. Smith had paid the balances left due, and unpaid by the principal, R. H. Wright, had lifted the notes, and himself caused judgments to be entered in the Court of Common Pleas of Perry County, to Nos. 219, 220, and 221, October Term, 1874, using the name of the payee as the legal plaintiff for the use of him, the said Samuel Smith, and against R. H. Wright, Samuel Smith, and Charles Wright, as defend- ants, and directed executions to be issued thereon, upon which levy was made upon the goods of Charles Wright. Charles Wright presented his petition, upon which a rule was granted on Smith to show cause why the judgments should not be stricken f^m the record, and the executions were sta3'ed. The court below, Junkin, P. J., afterwards dissolved the injunctions staying the executions, refused to strike off the judgments, and dis- charged the rules. The court below held, that a co-surety, before judgment was entered, could pay off the whole, and then use the obligation in the same man- ner, and just as the obligee could have done before the payments. It was assigned for error, that the court dissolved the injunctions, staying the executions, refusing to strike off the judgments, and dis- charging the rules. 1 contribution) ; Tiddy v. Harris, 101 N. Ca. 589 (unless the obligation is assigned to a trustee for the surety. See also Fully v. Pass North Carolina, 1898, 31 S. E. R. 478) ; Holliman v. Rogers, 6 Tex. 91 ; Faires v. Cockerell, 88 Tex. 428 (overruling Sublett v. McKinney, 19 Tex. 438, and Tutt v. Thornton, 57 Tex. 35, and reinstating Holliman v. Rogers, supra), Accord. — Ed. 1 The case is slightly abridged and the arguments are omitted. — Ed. 26 402 WRIGHT V. GROVER AND BAKER S. M. CO. [CHAP. IIL Mr. Justice Mercdr delivered the opinion of the court, May 29th, 187G. This case involves a consideration of two questions. One, the rights of a surety, who has paid the debt, against his co-surety ; the other, the manner in which he ma}' enforce them. 1. The general rule is well settled that if a suret}' has paid a debt, he is entitled to all the securities the creditor had against the principal debtor. If the claim be in judgment, he is entitled to be subrogated of record. Even if the judgment has been marked satisfied on the record, the surety paying is entitled to be subrogated as against all but inter- vening creditors. He is not only entitled to the creditor's judgment against the principal, but also to his claim against a subsequent surety who has become bail for the principal, for a stay of execution on the judgment. Burns v. The Huntingdon Bank ; : Greiner's Appeal ; 2 Kelch- ner v. Forney ; 3 Pott o. Nathans. 4 Although actual payment discharges a bond, judgment or other encumbrance at law, it does not in equity, when justice requires that it be kept afoot for the safety of the paying surety : Kuhn v. North ; 5 Fleming y. Beaver ; 6 Mehaffy v. Share ; 7 Mor- ris v. Oakford. 8 It is true, a payment by a surety with intent to dis- charge the security, extinguishes it in equit}* as well as at law. Kuhn v. North. 5 But when the amount of the debt is advanced to procure control of it, equity keeps it afoot to answer the intent of the advance- ment : Id. 2. If a paying surety is entitled to all the securities of the creditor, it would reasonably follow that he should also have all the remedies. Hence, it was held, in Himes v. Keller, 9 that he is entitled to a cession of the debt, and substitution or subrogation to all the rights and actions of the creditor against the debtor ; and the security is treated as be- tween the surety and debtor, as still subsisting and unextinguished. This principle is recognized in numerous cases, among which ma}' be cited Rittenhouse v. Levering ; 10 Cottrell's Appeal ; Springer's Adm'r v. Springer. 11 An intent to prevent the extinguishment of the debt will be presumed whenever it is the interest of the paying suret}' that it be kept alive. Richards v. Ayres; 12 Duncan v. Drury ; 13 Morris v. Oak- ford; 14 Gossin v. Brown. 15 It is contended, however, that the rule of subrogation or contribution applies, as between surety and principal debtor onby, and not as between co-sureties. Lidderdale's Ex'rs v. Robinson's Adm'r, 16 arose under a Virginia statute, which declared "all bills of exchange which are or shall be protested, shall, after the death of the drawer or endorsers thereof, be accounted of equal dignity with a judgment." The claim 1 1 Penn. R. 395. 2 2 Watts, 414. 3 5 Casey, 47. * 1 W. & S. 155. 6 10 S. & R. 399. 6 2 Rawle, 128 » 2 Penn. R. 378. 8 9 Rarr. 500. 9 3 W. & S. 404. 10 6 W. & S. 190. " 7 Wright, 518. M 1 W. & S. 485. w 9 Barr, 332. « Id. 498. 1 5 1 Jones 527. u 2 Broekenbrough, 160. SECT. I] WEIGHT V. GROVER AND BAKER S. M. CO. 403 was upon four protested bills of exchange, on which there were two joint sureties. They were both dead. One of them had paid more than his proportion of the bill, and his administrator churned a pri- ority over other creditors, as well against the estate of the co-en- dorser as against the drawer. He claimed as a judgment creditor against his co-suretj*, by virtue of the legal character given to the bill. The other creditors contended that between co-endorsers, one paying an excess over the other must resort to his action at law to recover it, and this defeated his preference ; but it was held by Chief Justice Mar- shall, that the representatives of the surety who had overpaid, were en- titled to rank according to the dignity of the claims on which such excess was paid ; that the principle of substitution applied equally to cases arising between co-sureties, as to those between a surety and his prin- cipal. On a division of opinion the case was certified to the Supreme Court of the United States, and this view was affirmed in 12 Wheaton, 594. The application of this rule as between co-sureties has been fre- quently recognized in this State : Fleming v. Beaver, 1 Croft v. Moore, 2 Lathrop and Dale's Appeal, 3 Gossin v. Brown, 4 Springer's Adm'r v. Springer, et al., b Mosier's Appeal. 6 In Hess's Estate, 7 it is expressly held that a surety who pays his principal's debt is entitled to be sub- rogated to all the rights and remedies of the creditor, against his co- surety, in the same manner as against the principal. An actual assignment is unnecessary. The right of substitution i/ the substantial thing ; the actual substitution is unimportant. The right of substitution being shown and the suret}' having paid the debt, he succeeds by operation of law to the rights of the creditor. Flem- ing v. Beaver. 1 It is contended that the original obligation is extin- guished, inasmuch as the word "paid" was written on its face. We answer, it had to be paid to the original creditor before the right of substitution could arise. We have shown that the satisfaction on the record of a judgment paid by a surety does not extinguish it as to the paying surety. The same reason applies to the note in this case, and prevents its extinguishment to the prejudice of the surety. Hence, we see no error in the learned judge holding that judgment might be entered on the note in the names of the original obligees fot the use of the surety who had paid it. The amount to be collected of the co-surety is subject to the equitable power of the court : that power was properly exercised in this case. Judgment affirmed.* 1 2 Rawle, 128. 2 9 Watts, 451. 3 1 Barr, 512. 4 1 Jones, 527. 5 7 Wright, 518. 6 6 P. F. Smith, 76. 7 19 P. F. Smith, 272. 8 The right of a surety to sue the principal or a co-surety upon the ohligation signed by both as co-obligors, but paid by himself, was recognized in the following cases : U. S. v. Bunker, 4 Wash. C. C. 446 ; Blackman v. Joiner, 81 Ala. 344 (statutory action on judgment, if assigned to surety in writing) ; Howland v. White, 48 HI. Ap. 236 ; Braught v. Griffith, 16 Iowa, 26, 35; Smith v. Latiner, 15 B. Mon. 75; Stratton v. Henser (Kentucky, 1897), 42 S. W. R. 1133 ; Martindale v. Brock, 41 Md. 571 (statu- tory) ; Carroll v. Bowie, 7 Gill, 34 ; Kimmel v. Lowe, 28 Minn. 265 ; Eaton v. Lam- 404 s, JDREW V. LOCKEXI [CHAP. III. - ^C~~2> ^ 2. o t> # 7> reported in 32 Ewvan,V&\ ^v^-9 ^r^c^2. ■*£! At the close of the year 1852, the plaintiff, who was then Miss Odell, and residing with her stepfather, the defendant Lockett, was entitled to two undivided fifth parts in certain freehold and copyhold heredita- ments, a part of which were in question in this suit. Her stepfather, , Mr. Lockett, was entitled to two other undivided fifth parts in the same ' hereditaments, and his daughter, Miss Lockett, now Mrs. Ayres, was f r^P~ ^L^/ entitled to the remaining one fifth. In January, 1853, Mr. Lockett , was desirous of borrowing some money on the security of his share in ~J *■ ■*■ u -H*the property, to facilitate which the plaintiff consented to join with him _^a — ;j£_ and to make her share of the property also liable for the sum advanced. ! "«* , ••>. Accordingly, on 21st January, 1853, an indenture of mortgage was , S~ f *+ * +*v executed, whereby Mr. Lockett mortgaged his undivided two fifth parts y ^ to Mr. Evans to secure the sum of £2,000, and the plaintiff also mort- ^c cl gaged and charged her undivided two fifths in the same hereditaments "~^rr-tn August, 1803, Lockett mortgaged his undivided two fifths, subject to the mortgage to Evans, to Miss Charsley, to secure a sum of £728, which mortgage is vested in the defendant, Mr. Sworder, who acted as solicitor for the lady in that transaction, he is entitled to have that paid out of the two fifths belonging to Lockett, against all persons except the mortgagee Evans, and the authorities which are relied on for this purpose are Williams v. Owen ; Bowker v. Bull ; 3 and Fare- brother v. Wodehouse, 4 before me. But I am of opinion that none of these cases establish the proposi- tion that would be necessar}* in order to maintain the contention of the defendant. In the first place, all question of absence of notice of the first incumbrance and any right which might flow from being a pur- 1 The statement has been slightly abridged, and only a part of tbe opinion is given. — Ed. 2 10 Beav. 154. 3 1 Sim. (N. S.) 29. 4 23 Beav. 18. 406 DREW V. LOCKETT. [CHAP. III. chaser for value without notice ma}- be disregarded in the present case. No such questions arise here, the prior mortgage to Evans was well known to the subsequent mortgagees, and it was subject to that charge that the subsequent mortgages were created. The utmost that anj- of those cases have gone appears to me to be this : — that as the surety knew that if the mortgagee, the payment of whose debt he guaranteed, advanced any further mone}- to the mortgagor on the security of the same property, he would be entitled to tack the second mortgage to the former, and that he could not be compelled to reconvey the propert}' until both mortgages were satisfied, so the surety cannot insist on inter- posing between the two securities, and put himself in a better situation than the person for whom he became surety. That he cannot insist on being a first mortgagee before the second mortgagee, if he tender the mone} r sufficient to pay off the first mortgage, and thus endeavor to exclude the second charge created in favor of the original creditor. The validity of these decisions is not now the question before me, but they stand on a separate ground, and it is to be observed that this right of a first mortgagee to tack further advances is a matter which the surety might prevent by a stipulation in his original contract, that his suretyship for the first charge should cease and determine in case he, the mortgagee, should advance further sums on the secur^' of the same property without the consent of the surety. But even this exception from the rule can onlv apply in cases where the first mortgagee has made his subsequent advance in ignorance of any other charge having been made by the mortgagor on the same property in favor of any other person. In other words, it is onl y in cases where the first mortgagee could tack hissubsequent advance to his first mortgage that he could apply this exception to the doctrine. But if, after the mortgage, for the payment ot which the surety is bound, the mortgagor should obtain money from another person on the security of the first mortgaged here- ditaments, and if notice of that second mortgage should be given to the first mortgagee, then no further advance made by him to the mortgagor could be tacked on to his first mortgage, nor could the right of the suret} T to stand in the place of the first mortgagee, in respect of his first mortgage when paid off, be contested, in case the surety advanced any mone} r for that purpose, unless, in the solitaiy case where the first mortgagee advanced further money on the same security, without knowledge or notice of any charge prior to his second advance. I am of opinio n that a suret}' who pays off the debt for which he be- ' came suret} T must be entitled to all the equities which the creditor. )$ A J> A/ *~1 whose debts he paid off , co uld have enforced, not merely ag ainst the /T principal debtor, but also as against all persons claiming under h im. \J It is to be observed that the second and any subsequent mortgageels in no respect prejudiced by the enforcement of this equity ; when he advances his money he knows perfectly well that there is a prior charge on the property, and if he thinks fit to advance his money on such se- curity, it is his own affair, and he cannot afterwards with justice SECT. I.] DREW V. LOCKETT. 407 complain. T he amount being l imited, i t is a matter of indifference to him whether the firsFmortgagee or the surety is the prior claimant for C^J that amount, and it would be, in my opini on, a violation of all prin - cipl e if, when t he surety pays oil' the debt, he were not to be entitle d, as against the principal debtor and those who claim under him, to be paid the full amount due to h im. " In this case both Miss Chafsley and the defendant Sworder knew that the two fifths of Lockett's were mortgaged for £2,000 and interest ; it was subject to that charge that they advanced this money ; but now the defendant Sworder seeks to make out that the charge is £394 less than that sum ; nay more, for the defendant, who is consistent and logical in his contention, accordingly insists that the plaintiff ought to contribute one half of the first mortgage debt as if she had originally received one half of the monej- advanced b}- Evans. In this case suppose the plaintiff to have paid off Evans and to have taken a trans- fer of his mortgage securities, it is plain that no conveyance or release could have been obtained from her until she was repaid the full amount of the debt due to her in respect of Evans' mortgage. The legal estate vested in Sworder in the unsold portion of the mortgaged hereditaments cannot , in my opinion, avail mm ; tie cannot thereby convert his "mort- gage, which was subject to the £2,000 and interest included in the first charge, into a charge having priority over that £"J,,6(.)0, either as against Evans or as against an} 7 person entitled to stand in his place. IF he cannot as to the whole, so neither call he do so as to" any portion thereof, and that is what he now seeks to do by his present contention. The case of Willoughb}' v. Willoughb}', 1 to which I frequently have oc- casion to refer, 2 determines that, in such circumstances, the legal estate ^ does not put the person "who gets it in any better situation than he stood <^j ^1 in before. As regards all incumbrancers, of which he had notice before -^ he advanced his money, they have priority over him, whether heJias or has not got in the legal estate. 8 1 1 Term. Rep. 763. 2 See Sharpies v. Adams, 32 Beav. 213. 3 Knighton v. Curry, 62 Ala. 404; Turner v. Teague, 73 Ala. 554; Schuessler v. Dudley, 80 Ala. 547; Cummings v. May, 110 Ala. 479; Richeson v. Crawford, 94 111. 165; Hook v. Richeson, 115 111. 431; Colgrove v. Cox, 22 Ind. 43; Fence v. Armstrong, 95 Ind. 191 ; Fields v. Sherrill, 18 Kas. 365 ; Burk v. Chrisman, 3 B. Mon. 50; Magruder v. Peter, 11 Gill & J. 217; Yates v. Mead, 68 Miss. 787; Smithy. Schneider, 23 Mo. 447 ; Lynch v. Hancock, 14 S. Ca. 66 ; Uzzell v. Mack, 4 Humph. 319; Taul v. Epperson, 38* Tex. 492; Leake v. Ferguson, 2 Grat. 419; In re Hamit ton's Trusts, 10 Manitoba, 573, Accord. — Ed. - u/408 cottrell's appeal. [chap, iil «p^ COTTRELL'S APPEAL — BO WERS' ESTATE. ^ccZy Ud "3 <~>*+Ss~^^ir>^~ ^^ ^- ^> ^d *=**. , _ „ . In«ihe Supreme Court, Pennsylvania. 1854. ^^* . _ _ IN .THE SUPREME UOURT, PENNSYLVANIA^ 1«S4. ^ ' ' Appeal by J.*W". Cottrell from the decree' of th^ Common Pleas of --^jUl Lancaster County, directing distribution of proceeds of sale of real b£ estate of A. Bowers. Ephraim Hershey had a judgment v. Bowers, entered to January ^__Term, 1850 ; and Cottrell had a judgment against the same defendant "to January Term, 1852. In December, 1852, the property of Bowers --^ J&. was advertised for sale under execution issued on Hershey's judgment ; ff and Hershey agreed to stop the sale if Bowers gave him security for ■***«•*? . the amount of his judgment. Bowers proposed Isaac Pusey as " secur- ity." Bowers, in that month, gave to Hershey a negotiable note which was indorsed by Isaac Pusey. It was payable at sixty days, and was for an amount exceeding $700. Hershey stated his impres- sion to be that on receiving the note he handed to Bowers the single billon which his judgment was founded. On inquiry of Bowers as to entering satisfaction of the judgment, the latter suggested that it re- main as it was. Hershey stated that he took the note as a payment of his claim. Nothing was said at the time about his transferring the judgment to Pusey. The note was discounted at bank, and the proceeds received by Hershe}'. The note not being paid was pro- tested, but was subsequently paid by Puse}'. Afterwards, viz. on the 19th of May, 1853, Pusey procured from Hershey an assignment of the judgment, and claimed payment out of the proceeds of sale of Bowers' real estate. This was opposed by Cottrell. The auditor appointed reported in favor of Pusey, and exception being taken, the report was confirmed. It was excepted that the court erred in treating the judgment of Hershey as a valid judgment after it had been paid ; and in not direct- ing the payment of Cottrell's judgment. 1 The opinion of the court was delivered by Woodward, J. Subrogation is founded on principles of equity and benevolence, and may be decreed where no contract or privity of any kind exists between the parties. Wherever one not a mere volunteer discharges the debt of another, he is entitled to all the remedies which the creditor possessed against the debtor. Actual payment discharges a judgment or other encumbrance at law, b ut whe re justice requires it we keep it afoot in equity ior tiie satety of the paying surety. These" principles, settled in numerous cases, whicETwill be founcT collected in 2 Wharton's Digest, 612, are decisive against this appellant. There is nothing in the argument that Hershey's judgment had been 1 The arguments of counsel are omitted. — Ed. SECT. I.] WILLIAMS V. OWEN. 409 extinguished. It was paid to bo sure, and this was necessary to entitle the surety to subrogation, for substitution of a surety is never allowed where anything remains clue to the principal; Iveyner v. Keyner; 1 Bank of Pennsylvania v. Potius ; ' 2 but it was not satisfied on record, and was finally assigned voluntarily by Hershey to Pusey, who ac- quired, thus, a legal title as well as an equitable right to it as a means of indemnit}'. We are of opinion the court were right in confirming the distribution made by the auditor, and the decree is accordingly affirmed. 8 ^^t -?~^<~i^Mw~-o T [R CHARLES MALL, ed in 19 (fliancerv Divi. [Reported in 19 (fliancery Division, 615.] yJUJ f) '. Special Case. By an indenture of mortgage dated the 28th of \f V December, 1854, made between William Spenee, of the first part, the — v —"ZL plaintiff J. S. Forbes, of the second part, and A. Weir, of the third part, jfcr William Spenee assigned the same premises unto A. Weir, his execu- A * ^^T.ors, &c, to secure the repayment of a sum of £200 and interest at / 5 per cent. The plaintiff joined in the mortgage as surety for William Spenee. Subsequently to the 28th of December, 1854, i. e. in Ma}', 1856, August, 1863, August, 1864, and May, 1866, William Spenee borrowed sums of money amounting to £530 from A. Weir, and by four indentures charged the same premises with the payment thereof and interest. The plaintiff had no knowledge of these advances having been_made until the 6th of N ovember, .1875. A. Weir died in September, 1878, having appointed the defendants his executors. Spenee having failed to pay the interest, the plaintiff offered to pay principal and interest, and requested a transfer of the mortgaged premises. The defendants claimed the right to retain their premises as security for the further sums advanced. 2 Hall, V. C. The arguments which have been submitted on behalf of the executors do not affect the conclusion which I, in the course of them, 1 Approved in Farebrother v. Wodehouse, 23 Beav. 18. In this case the defendant I y^Ut' *** held two mortgages given at one time by his debtor, one for £3,000 and one for £2,000. /^r^j^^" The plaintiff was surety on the £2,000 debt, but not on the other. Although the plain- tiff paid the £2,000 debt, it was adjudged that he could not have the mortgage securing ^ J* ' C~ tnat debt until he paid the other debt al s o. — Ed. a The statement is abridged, and the arguments are omitted. — Ed. SECT. I.] FORBES V. JACKSON. 411 intimated that I had come to ; nor do they affect the principle laid down in the case of Newton v. Chorlton, 1 to which I referred on Thursday last. I consider that the decision in that case is perfectly good law, subject to this observation that Vice-Chancellor Sir W. Page Wood expressed an opinion that where an additional security is taken by the creditor after the original security was given, and the contract of suretyship entered into, the right of the surety as regards the securities given to the principal creditor did not extend to the additional securities. The Vice-Chancellor did not think that the cases went so far as to give a surety the benefit of the security subsequently taken by the creditor. But that is a view which never commended itself to me, and it was certainly not adopted by Lord Justice Knight Bruce and Lord Justice Turner in a case before them of Lake v. Brutton, 2 and I may observe that Vice-Chancellor Sir W. Pase Wood himself, in a case afterwards before him of Pledge v. Buss, stated that his judgment in that case had been disapproved of by those Lord Justices, although not absolutely overruled. The Vice- Chancellor added: "I am as much bound to submit to their opinion as if the decision had been reversed on appeal before them." The Vice-Chancellor did not mention the names of the cases to which he referred, but I may state that some twenty years ago in my cop}' of Mr. Johnson's reports I noted against Pledge v. Buss the case of Lake v. Brutton as being the one which the Vice-Chancellor had in his mind, and there is also another case of Pearl v. Deacon, 3 which I thought was referred to by him. That was an appeal from a decision of the late Master of the Rolls (Sir John Romilly). It was the case of a subsequent security ; but it is not material for my purpose to consider the general question whether there has been a release, or what is the effect of taking an additional security, and then whether that additional security should be held available for the benefit of the suret}'. There has never been, so far as I know, any disapproval of the general principle which was laid down by the Vice-Chancellor in Newton v. Chorlton, except so far, if at all, as the Master of the Rolls may have dealt with it in Farebrother v. Wodehouse, 4 where he seems to have followed the case relied upon here of Williams v. Owen, which certainly, if it were law, would be an authorit}' in favor of the executors. In the case of Newton v. Cho rlton, the principle laid down by Vice-Chancellor Sir W. Page Wood w n.s_th at a surety was to have t he benefit of all securi ties, " whether by w ay of suret3 T shi p or mortgage," and he afterwards added 5 : " The surety has a right at any moment to eveiy security held by the creditor at the date of the contract — it has never yet gone bej'ond that ; and he has further a right to say, you must always hold yourself in a position to be put in motion, at my request, against the principal debtor." I consider that the decision in Newton v. Chorlton was carried higher by the decision of the Lord Justices in Lake v. Brutton, 2 which, as I have said, the Vice- Chancellor himself recognized in Pledge v. Buss, 6 and I consider the 1 10 Hare, 646. 2 8 D. N. & G. 441. 3 1 De G. & J. 461. 4 23 Beav. 18. 5 10 Hare, 652. 6 j h. 663, 668. 412 FOKBES V. JACKSON. [CHAP. III. decision must be applicable to securities taken subsequently to the original mortgage. The Master of the Rolls in Farebrother v. Wode- house * appears to have followed Williams v. Owen, as it applies to a subsequent security taken by the original creditor — that he could make advances to the debtor, and that they would prevail over the right of the surety. That principle is entirely at variance with the decision in Newton v. Chorlton, and it is a singular circumstance that in a subse- quent case of Drew v. Lockett before him, although he had followed Williams v. Owen, Lord Romilly said : " I am of opinion that a surety who pays off the debt for which he became surety must be entitled to all the equities which the creditor whose debts he paid off, could have enforced, not merely against the principal debtor, but also as against all persons claiming under him." It was odd that Lord Romilly should agree with the principle laid down in Newton v. Chorlton, and yet come to a conclusion in Farebrother v. Wodehouse which seems to be at vari- ance with it. The principle on which Vice-Chancellor Sir W. Page Wood proceeded was the same as laid down by Lord Eldon in the case of Mayhew v. Crickett, 2 which I consider a leading authority, and also laid down in earlier cases, — that the su rety is entitled to have all the securities preserved for him, which were taken at the time of the surety- ship, or, as I think it is nowsettled, subsequently. Nor does it matter at allin principle, whether trie creditor takes aTurther security for further advances made prior to the time when the surety makes payment of the debt. They have nothing to do with the surety. He is entitle d to the benefit of th e securities, though his payme nt be not made until_after the time when the further advances were made by the creditor. The p~r in- ciple is that the surety in effect bargains that the securities which the creditor takes shall be for him, if and when he shall be called upon to make a ny payme nt, and it is the duty of the creditor to keep the securi- t ies intact ; not to give them up or to burthen them with further advances. The same principle was enunciated in the case of Duncan, Fox, "3c Co. v. North and South Wales Bank, 3 where the Master of the Rolls on the hearing upon appeal from the judgment of Vice-Chancellor Little, said : "It cannot be said that in ever} r instance a surety is entitled to stand in the place of the principal creditor as regards other securities. That is true as regards securities given by the debtor, but is not true as regards securities given by co-sureties." But here I have nothing to do with the question which was decided in that case — a question between persons alleged to be co-sureties. That case was carried to the House of Lords, and is reported in 6 App. Cas. 1. The House of Lords, though they reversed the judgment of the Court of Appeal, did not say any- thing which affected the principle referred to by the Master of the Rolls, and which is all that I desire to notice. I consider that the prin- ciple laid down in that case is perfectly plain and right ; and also that the decision in Williams v. Owen is not law now, and cannot after the cases to which I have referred be followed. I decline to recognize it. 1 23 Beav. 18. 2 2 Sw. 185. 3 if Ch. D. 88. A^ SECT tTl}* ** t ^>^ 'G&fTBBst St. ^wO-T^J) There is another case to which I desire to refers that of Green v. Wynn, 1 in which there was a surety, and Lord IIatiierley said,' 2 "but where there is a mortgage, of course any person under a liability to pay the (*- interest would be at liberty to redeem." I am of opinion, therefore, that the plaintiff was right in his offer to pay off the debt, and that he is entitled to have the securities, and to say that the further charges for the sums subsequently advanced are inoperative as against him. The defendants, the executors, having refused the offer made, and being wrong in insisting on retaining the securities for the subsequent ad- vances, must pay the costs of the action. The declaration will be that on payment to the executors of what shall be found due for principal, interests, and costs in respect of the mortgage of the 28th of December, 1854, the plaintiff is entitled to have the securities comprised in the deed transferred to him, and to hold them as securities for the repayment to him of the sums which may be paid to the executors by him. The costs of the plaintiff will be deducted from the sum which he may be required to pay, as in Wheaton v. Graham ; 3 but the interest will not be stopped as from the date when the offer of payment was made. 4 - ■—_ •? . * r\ Term, 1879. •^ In^the Cqur x of Appeals, Virginia, July Tei r^>*~4Z- C^S-^2- ^SL^^Wt W* ^UL. JZ- ^=- On the 5th of May, 1874, Frank S. Grubb sold to George W. Wysor, Jr., a tract of land for $3,199, paj'able in three equal annual instalments. For the first instalment Wysor, Jr., executed a negotiable note, with his father, George W. Wysor, Sr., as surety, payable twelve months after date, and for the other two instalments executed his own bonds, pa}"able at two and three years ; the title to the whole land was retained by the vendor to secure the purchase-money. The note for the first payment was assigned by the payee, Grubb, before maturity, to E. McCormick, and by him indorsed to Hurst, Purnell, & Co., and, after protest at maturity, paid to the holder by W}*sor, Sr., the surety. ^*-^t- ^/ Wysor, Sr., then filed his bill in the Circuit Court of Carroll County against Wysor, Jr., and Grubb, claiming that having paid said note for the first instalment of the purchase-money of said land as surety for his son, Wysor, Jr., who has no other property than his interest in said land, he is entitled to be subrogated to the lien rights of Grubb, She vendor, and to be paid out of the proceeds of the sale of said land ^f 2 Law Rep. 4 Ch. 207. 3 24 Beav. 483. r. s. 29 ; Re Kirkwood's Estate, L. R. 1 Ir. 108 ; City 1 Law Rep. 4 Ch. 204. 4 Bowker v. Bull, 1 Sim. Bank v. Dudgeon, 65 111. J ; Pence v. Armstrong, 95 Ind. 191 ; Nat. Bank v. Silliman, 65 N. Y. 475, Accord. — Ed. Av*i/- ^c ^-CA-O 414 GRTJBBS V. WYSOR. [CHAP. III. before Grubb should be paid the balance of the purchase-money, and asking that a sale of said land should be directed for this purpose. A decree to effect this having been rendered by the Circuit Court of Car- roll County, Grubb appealed therefrom to the Court of Appeals. Crockett & Blair, for the appellant. Walker, for the appellee. Burks, J., delivered the opinion of the Court. That the negotiable note of June 1, 1874, was given for the first in- stalment of purchase-money for the tract of land sold by the appellant, Grubb, to the appellee, George W. Wysor, Jr. ; that the appellee, George W. Wysor, Sr., was surety for the latter on said note ; that the note was assigned by Grubb, the payee, to McCormick, and by the latter indorsed to Hurst, Purnell, & Co. , and after protest at maturity for non-payment, was paid to the holder by the surety, are facts not questioned in this case. The averments in Grubb's answer to the bill, that the note was paid by the complainant, not as surety, but on his own account, or, if paid by him as suret}', that he had received satisfaction from his principal for the amount so paid, are affirmative statements and not supported by the proofs. So that the only question left for decision by this court i s, wheth er the surety is e ntitled to th e substitution an d pri ority granted him bv the decree of O ctob er 12, 187 7. The subrogation of the surety, for indemnit}', on pa} r ment of the debt of his principal, to all the rights, remedies, and securities of the creditor against the principal for the debt, is a familiar doctrine of courts of chancery everywhere. It is founded, it is said, not upon contract, but upon a principle of natufaTequit}' and justice. "It is a mode," observes Judge Strong, "which equity adopts to compel the ultimate discharge of the debt by him who in good conscience ought to pay it, and to relieve him whom none but the creditor could ask to pay. To effect this, the latter is allowed to take the place of the creditor, and make use of all the creditor's securities as if they were his own." McCormick v. Irwin. 1 B ut this principle ha s no application where its enforcement would be unjust and inequitable . It may be invoked for indemnitj", and some- times, and o n certain conditions, for exoneration, by a surety against his principal, but not in a case where it would operate to the prejudice of the creditor. For instance, it has been held by one, whose judg- ments always command, as they deserve, the highest respect, that the surety, upon paying the debt, is entitled to all the securities held by the creditor, "provided the creditor has no lien upon them or right to make them available against the principal debtor, to enforce the pa} r - ment of a debt different from that which the surety has paid. But_if t he creditor has such a right, and one arising out of th e transaction i tself, of wh ich the suretyship forms a part, then the right of the surety to the benefit of the securities is subordinate to the right of the creditor o" 1 11 Casey, 111, 117. SECT. I.] GRUBBS V. WYSOR. 415 to nuike them available for the payment of his other claims, and can only be made available after the paramount right is satisfied." Sir John Rom illy, M. R., in Farebrother v. Wodehouse. 1 The principle here enunciated would apply, as it seems to us, with equal if not greater force, to a case where the creditor has a security for an entire debt, payable in instalments, for one only of which the surety is personally bound. To allow the surety, on payment of this instalment, to have the benefit of the security, which was provided for the entire debt, and postpone the creditor until the surety is indemni- fied, would be, in effect, in a case where the security is insufficient to pay the whole debt, to require the creditor to indemnify, instead of the principal debtor ; for, in the case supposed, the creditor has the prior, subsisting paramount right to resort to the security until his entire debt is satisfied. Such is the case in judgment. Grubb, by written contract, stipu- lated to sell his tract of land to Wysor (the younger) at the price of $3,199, payable in three equal annual interest-bearing instalments, and expressly retained the title until all the purchase-money should be paid. One month thereafter, the negotiable note was taken for the instalment first to be paid. The land, no doubt, was deemed inadequate security for the payment of the price agreed upon, and the object of the note was to strengthen the security. The land stood as security for the en- tire purchase-money, and the note as additional security for one instal- ment. If the view of the Circuit Court prevails, what was intended as further security amounts practically to no securit}' whatever ; for, by substitution, as applied in the first decree, and the priority therein given to the suret} r , and by the sale under that decree, the whole tract of land has been taken to indemnify the surety for the payment of the note, and the creditor is left without any securit}" for the two thirds of the purchase-money due him and unpaid. This cannot be equity. The surety will be permitted to occupy the pl ace of the creditor, when the Vj * ' latter has n o longer occasion to hold it for hi s own pr otection, but eaui tv 6 ^*"^ will never displace him, to his prejudice, merely to give the surety a /f better footing. ,r ~ Decree reversed? 1 23 Beav. K. 18, cited in Brandt on Suretyship, § 279. 2 A portion of the opinion is omitted. — Ed. 8 Zook v. Clemmer, 44 Ind. 15; Vert v. Voss, 74 Ind. 565; Rice v. Morris, 82 Ind. 204 ; Welch v. Parran, 2 Gill, 320; Parker v. Mercer, 7 Miss. 320; Mathews v. Switz- ler, 46 Mo. 301 (compare Allison v. Sutterlin, 50 Mo. 274), Accord. Greber v. Sharp, 72 Ind. 553, Contra. One who is surety for several notes secured by mortgage by paying one is not enti- tled to subrogation at the expense of the holders of the others. Carithers v. Stuart, 87 Ind. 424; Massie v. Mann, 17 Iowa, 131. But see contra, Lynch v. Hancock, 14 S. Ca. 66. In Ellis v. Roscoe, 4 Baxter, 418, three notes secured by a vendor's lien were trans- ferred to three heirs. One heir sued the maker. A became surety to stay judgment, and afterwards paid the judgment. This was held to subrogate A to one third of the lien. In Dick v. Moon, 26 Minn. 309, A, the holder of four notes secured by one mort« 416 EX PARTE MARSHAL. [CHAP. IIL Ex parte MARSHAL. In Chancery, before Lord Hardwicke, C, December 21, 1752. [Reported in 1 Atkyns, 129.] Mr. Garway of Worcester drew a great number of bills, payable to Vere and Asgill, upon Hatton, who had no effects of Garway's in his hands, but, however, accepted the bills for the honor of the drawer. Garway becomes a bankrupt, and Hatton, by means of the great sums he paid on account of such acceptance as before mentioned, becomes a bankrupt likewise. The bill-holders prove under both commissions, and receive dividends, but not sufficient to pay 20s. in the pound ; and in April last upon a former day of petitions, Marshal, &c, the assignees of Hatton, preferred a petition to Lord Chancellor, and prayed to stand in the place of the bill-holders pro tcmto, as they had received under Hatton's commission against the estate of Garway; Hatton, as was insisted by the peti- tioner's counsel, being to be considered as a surety for the debt, and Garway a principal ; and Lord Chancellor at the former hearing made an order accordingly ; but it being strongly objected by the counsel for Garway's creditors, that this would be charging Garway's estate doubly, directed the petition to stand over ; and on its coming on again this day, his lordship ordered, that the petitioners, as assignees of Hat- ton, should stand in the place of the bill-holders pro tanto, as Hatton's estate had paid on account of his acceptance of the said bills, but should not be entitled to any dividend from Garway's estate, till the bill-holders had received a full satisfaction for their debts ; and if the surplus of Garway's estate, after the bill-holders were fully satisfied, should not be sufficient to answer what Hatton had paid as the acceptor of Garway's bills, then his Lordship declared that nothing in this order should prejudice an}' right the petitioners might have by action against the person of Garway for the residue of their demand, notwithstanding Garway has had his certificate ; for his Lordship said, it seemed to him as if Hatton's demand did not property arise till after the issuing of the commission against Garway ; because, though there is an im- plied contract between drawer and acceptor, yet there is no breach on the part of drawer till after his bankruptcy, and consequently Hatton is not a creditor under the commission, because his debt is subsequent to it ; nor does he fall linger the description of persons in the 7 Geo. L, who may sue out commissions, though their debts are payable at a future da}-. There debitum in yrcesenti solvendum infuturo, but here gage on the maker's land, assigned the notes and mortgage to B, and also mortgaged laud of his own to secure two of the four notes. A's land was sold under this last mortgage for enough to pay the two notes secured by it. Whether A could be sub- ogated to one half of the mortgage on the maker's land was left an open question. — Ed. BE( y r . L J EX PARTE MOOD. 417 it was contingent whether it would ever be a debt, as Garway might not have failed. The counsel for the petitioners mentioned the case Ex parte Walton, Dec. 23, 1743, in the matter of Winsmore's bankruptcy, where, as he stated it, Lord Chancellor made an order, that the assignees under the commission against the acceptor should come under the commission against Winsmore the drawer pro tanto, as the acceptor had paid on account of such bills, and to receive a dividend ratably with the rest of the creditors. Lord Chancellor said, that the order alluded to in Winsmore's bank- ruptcy was not as stated, nor was it applicable to this case, but that supposing the two cases to be something similar, he thought the direc- tions he had now given under the present petition were the justice of the case ; and therefore had ordered accordingly. 1 Ex PARTE WOOD. In Chancery, before Lord Thurlow, C, December 12, 1791. [Reported in 10 Veseij, 415, cited.'] The case arose upon a joint and several bond, executed by Cox and Jameson. Cox's estate paid a great part of the debt by dividends under a Commission against him. He was surety. Afterwards Jameson, the principal, became a bankrupt. The bondholders proved only the re- mainder of their debt under his Commission. Cox's assignees proved the amount of the dividends they had paid. The bondholders pre- sented the petition ; insisting that the assignees of Cox should not receive dividends to their prejudice ; and should hold dividends, that had been received, in trust for the petitioners. Lord Thurlow dis- missed that petition ; holding, that, though Jameson's assignees would have to pay dividends to those bondholders, yet in respect of what had been paid by Cox's assignees previously to the bankruptcy of Jameson, they should have liberty to prove so much ; and the divi- dends paid to Cox's assignees according to that would be part of Cox's estate, and divisible among all his creditors ; and Lord Thurlow thought, the distinction was, that in Ex parte Marshal the paj'ment was after the bankruptcy, and in the other case it was previous to the bankruptcy ; and he could not go into farther nicety. 1 Ex parte Coplestone Mont. & Ch. 262, Accord. — Ed. 418 EX PARTE RUSHFORTH. [CHAP. IIL Ex parte TURNER. In Chancery, before Lord Loughborough, July 28, 1796. [Reported in 3 Vesey, 243.] The petitioner had lent his name by acceptance and indorsement for the accommodation of the bankrupt, who discounted the bills so accepted or indorsed with Snaith and Co. After the bankruptcy upon the appli- cation of Snaith and Co, the petitioner paid the full value of those bills, amounting to £815 15s. to them. They were creditors of the bankrupt to a much larger amount, and they proved their whole demand, includ- ing the amount of the bills received from the petitioner. The petitioner prayed, that Snaith and Co. might assign to the petitioner the dividends due upon the proofs in respect of the bills he had paid. Ex parte Marshal was cited. Lord Chancellor [Loughborough] observing, that Snaith and Co. could not be turned into trustees to the prejudice of any right they might have, made the order that Snaith and Co. shall take out of the dividend upon the £815 15s. so much as would make up the propor- tion, which they would have received upon the residue of the debt proved beyond the £815 15s., if that debt of £815 15s. had been ex- punged ; and the rest of the dividend upon the £815 15s. be paid to the petitioner ; and that the dividend shall remain in the hands of the assignees, till it shall appear, what proportion Snaith and Co. are entitled to. Ex parte RUSHFORTH. In Chancery, before Lord Eldon, C, March 16, 1804, February 5, 1805. [Reported in 10 Vesey, 409.] A joint and several bond dated the 7th of June, 1800, was executed by Benjamin and William Rushforth, carrying on business in partner- ship, and their brother Richard Rushforth, the petitioner, to Seaton and Co. in the penal sum of £20.000 : with condition to be void, if they or any of them, their or any of their heirs, executors, or administrators, should from time to time and at all times thereafter, within the space of two calendar months next after notice in writing, pa}' Seaton and Co., their heirs, executors, &c. all and every such sum and sums of money, which shall and may at any time or times hereafter be paid or advanced by Seaton and Co. on account of Benjamin and William SECT. I.] EX PABTE KUSHFOKTH. 419 Rushforth, by payment or discounting of drafts, bills, &c. ; with interest and commission. On the 23d of June a Commission of Bankruptcy issued against Ben- jamin and William Rushforth. Seaton and Co. proved under the Com- mission a debt of £20,000 upon the balance of their banking account. After that proof they called upon the petitioner to pay £10,000 under the bond, as surety. Having paid £4,270 in part, he presented the peti- tion ; praying that upon his paying £10,000 to Seaton and Co. they may be ordered to assign to him the benefit of the dividends on the sum of $10,000, or so much of such dividends as would remain after satisfying Seaton and Co. the proportion they would be entitled to out of such dividends upon the residue of their debt, if £10,000, part of their said debt, were expunged from the proceedings. 1 The Lord Chancellor [Eldon]. I have had great doubt upon this case. It is clear, where a pei'son has a demand upon a bill or bond against several persons, and no part of that demand has been paid be- fore the bankruptcy by any of them, he may prove against each ; and the circumstance, that one is a surety, the other the principal, or a co- surety, as between themselves, does not give a right to stop the holder receiving dividends, until he has received 20s. in the pound. 2 That is well settled in Ex parte Marshal and Ex parte Wyldmau ; and it ap- plies to joint and several demands, either by bill or bond. In Ex parte Marshal it happened, that the person was acceptor without effects ; therefore, for the accommodation of the drawer; and, being so, if he 1 The statement of facts is abridged, the arguments of counsel and a portion of Lord Eldon's opinion are omitted. — Ed. 2 Payment by a principal, or by a prior party to a bill or note after proof in the bankruptcy of the surety or subsequent party to the bill or note will not diminish the amount to be proved against the surety or subsequent party. Ex parte Wyldmau, 1 Ves. Sr. 115, 1 Atk. 109, s. c. In re Weeks, 13 N. B. R. 263; Re Pulsifer, 9 Biss. 487, 14 Fed. Rep. 247, s. c. ; Re Hicks, 19 N. B. R. 299 ; Re Meyer. 78 Wis. 615. But see contra, Ex parte Lefebvre, 2 P. Wms. 407 ; In re Howard, 4 N. B. R. 571 ; In re Pulsifer, 9 N. B. R. 487 ; Lowell v. French, 54 Vt. 193. Similarly if a surety or a subsequent party to a bill or note makes a general assign- ment in trust for creditors, a provable claim against his estate will not be reduced by a subsequent payment to the creditor by the principal or prior party. Williams v. Im- porters Bank, 44 111. Ap. 295 ; Citizens Bank v. Patterson, 78 Ky. 291 ; Southern Bank v. Byhs, 67 Mich. 296 ; Third Bank v. Haug, 82 Mich. 607 ; Brown v. Merchants Bank, 79 N. Ca. 244; Miller's Est., 82 Pa. 113 ; Ragsdale v. Bank, 45 S. Ca. 575; Citizen's Bank v. Kendrick, 92 Tenn. 437; First Bank v. Williamson (Tennessee, 1895), 3£ S. W. R. 573 (semble). On the other hand a payment by a principal or by a prior party to a bill or note be- fore proof made in the bankruptcy of a surety or a subsequent party to a bill or note, or before the execution of a general assignment in trust for the creditors of a surety of subsequent party to a bill or note will reduce pro tanto the amount of the claim prov- able by the creditor in the bankruptcy or under the general assignment. Ex parte Ryswick, 2 P. Wms. 89 ; Ex parte Wyldman, 2 Ves. Sr. 115, 1 Atk. 109, s. c. ; Ex parte Royal Bank, 2 Rose, 197 ; Re Blakeley, 9 Morrell, 173 • In re Weeks, 13 N. B. R. 263; In re Hicks, 19 N. B. R. 299 (semble); Re Cram, I Hask. 89; In re Hamilton, 1 Fed. Rep. 800 ; Sohier v. Loring, 6 Cush. 537 ; Blake v. Ames, 8 All. 318 ; Nat. Bank p Porter, 122 Mass. 308 ; Bank v. Alexander, 85 N. Ca. 352. — Ed. 420 EX PARTE EUSHFOKTa [CHAP. III. had paid the bill in full, he had a right to insist, that they should hold the proof for his benefit. If the securit}* carries interest, is that equity to be extended to the prejudice of the creditor's claim of interest? In the case of Cox and Jameson the money, paid by Cox's assignees, was paid and advanced for Jameson, and the bondholders insisted Cox's assignees should not prove against Jameson's estate ; for though it was true the bondholders could only prove the residue of the debt, yet Cox's estate was also debtor to them for that residue ; and Cox's assignees should not draw, in respect of what they paid before the bankruptcy, out of a fund, also liable with them to the residue of that debt. Suppose there had been no one else to prove," that Cox's as- signee had paid £5,000 ; and that was one half of the debt : it is sin- gular ; but Lord Thurlow's opinion was, that, if there was no one to enter into competition but those two parties, Cox's assignees should take out of the estate of Jameson £2,500, for instance ; the bond- holders taking the other £2,500 : the sum taken by Cox's assignees to be divided among all his creditors. The consequence would be, that he, a co-obligor with Jameson, would take one half of what was in the hands of Jameson. That does not appear very equitable : but Lord Thurlow, regarding the rule of Law, thought it would create too much nicet}', if, because so strong a case as that might be put, he was to run through all the minutiae of all these cross and subtle equities. Lord Rosslyn, in Ex parte Turner, laid down a different rule: a case certainly constituted of different circumstances : the former being one bond, covering the whole debt ; and yet the relief was refused to the creditor: the latter case furnishing more objection to such relief: the demand being upon a great variety of securities, upon which a great number of persons were answerable, getting into the hands of the creditor, as security for a cash balance. The first question does not seem clearly decided, whether the petitioner could under the circum- stances be entitled to stand in the place of the creditor at all : the pur- pose of the deposit not being fully answered. Lord Rosslyn, however, thought the petitioner entitled to some benefit; and then came the question, in what shape? If that case is rightly determined, it leads to extreme nicety ; the proof being considered both as expunged, and as not expunged ; and, to ascertain that equity, an account must in every case be taken, what is the amount of the debts at the time ; what is to be the proportion of the dividend, if that arrangement is to be made ; and what, if it is not to be made. I am therefore not without hesitation, whether I ought to follow that Order. The Lord Chancellor. Upon the part of the petitioner it was contended, that he states nothing more than the common equity of a surety; and it is clear, that if the debt had been only £10,000, this equity would have resulted ; and he could have compelled the bankers to prove for his benefit, and make over their securities. A surety is entitled to all the securities the principal has. But it is said- here the SECT. I.] EX PARTE EUSIIFOETH. 421 debt is £20,000 ; and the}' are entitled to hold the whole proof against the surety ; and the assignees, on the other hand, contend, that, when they have received £10,000 that ought to be struck off from their proof. With reference to that, the question comes round to this ; whether, according to the true nature of such an engagement between all the parties in this bond and mortgage, it was competent to these bankers to go on without giving notice to the surety ; for this is a case in which they contracted to give him notice before forfeiture of the bond ; whether they were at liberty to swell the demand to his preju- dice beyond the sum of £10,000. The agreement was to advance all such sums as should be required ; but it is limited by an express con- tract for an obligation to secure all those sums ; and the question is whether that limitation in the extent of the obligation is not a sufficient ground for the inference, that those sums were not to be extended be- yond £10,000, to the destruction of every right of the surety. Take the case of two sureties, each for the separate sum of £10,000; each, paying the principal creditor, would be entitled to stand in his place for the sum paid. It would be very strong to hold, that, as they have taken but one suret}-, he shall be in a worse situation. I think the bankers are not entitled in equity to say, as against the surety, that their demand is more than £10,000, the amount of the bond he has given ; upon which he would be prima facie entitled to stand in their place : as to the residue of their debt, they ought to be considered, if I may so express it, as their own insurers. As this is perfectly a new case, I make the Order, with liberty to file a bill. 1 The order was made with the qualification in Ex parte Turner. 1 Paley v. Field, 12 Ves. 435, Accord. But in Queen v. O'Callaghan, 1 Ir. Eq. 439, the Court declined to apply the doctrine of the principal case to the prejudice of the Crown. — Ed. 422 EX PARTE TURQUAND. [CHAP. Ill Ex parte TURQUAND. In re FOTHERGILL. In the Court of Appeal, May 26, 1876. [Reported in 3 Chancery Division, 445.] This was an appeal from an order made by Mr. Registrar Brougham, sitting as Chief Judge in Bankruptcy, in the liquidation of Messrs. R. Fothergill and E. T. Hankey. Among the joint creditors of Fothergill & Hanke} T was Mr. E. Corry, a metal merchant, who had accepted for their accommodation bills to the amount of more than £160,000. He filed a liquidation petition on the 4th of June, 1875, and on the 10th of August his creditors agreed to a composition of 4s. in the pound. The holders of the bills accepted by him proved in his liquidation, and he paid composition to them to the amount of about £32,350. The bill-holders also proved in the liquidation of Fothergill & Han- key, the drawers of the bills, and applied for B debentures correspond- ing with their proofs. 1 Of these bill-holders, some, namely, the Lon- don and Westminster Bank, the Union Bank of London, the London Joint Stock Bank, Messrs. Richardson, Messrs. Gl}-n, Mills, & Co., the Alliance Bank, and the National Bank of Scotland, had received nothing under Cony's composition before making their proof, and therefore proved for their whole debt ; while others, namely, the West of England and South Wales Discount Bank, the City Bank, Messrs. Gurney & Co., and the National Discount Compan}-, had received 4s. in the pound upon their proof, and therefore proved for 16s. in the pound on the amount of their debts. Cony now claimed to be entitled to stand in the place of the bill- holders to the extent of 4s. in the pound, and to receive B debentures to that amount in their stead. Mr. Registrar Brougham sitting for the Chief Judge, made an order that Cony should be at liberty to prove against the estate of Fothergill & Hankey for £9,825, the amount of the composition paid to the West of England and the other firms who had proved for 16s. in the pound, and that, with respect to the proofs by the London and Westminster Bank and other firms who had proved for the whole amount of their debts, Corry was entitled to stand in the place £»f the said several creditors to the extent of 4s. in the pound on the amount of their several debts, and to receive B debentures to the amount of the said composition of 4s. in the pound, being about £22,525. From this decision the bill-holders, in the name of the trustee in the liquidation, appealed. During the progress of the argument it was conceded by the appel- lants that Mr. Corry should be permitted to prove for £9,825, being 1 By an arrangement with the creditors the dividends on claims proved were to he paid in debentures. — nil. SECT. I.J EX PARTE TURQUAND. 423 the amount of composition paid by him to bill-holders before tendering their proof, and the decision was therefore confined to the remaining sum of£22,525. x Mkllish, L. J. I am of the same opinion. It is perfectly clear that if bills are discounted in the market which are drawn by one firm upon another firm, and then both those firms become bankrupt or go into liquidation by arrangement, or agree to a composition, the bill- holder is entitled to prove against both estates and to receive all the dividends or composition he can get from both estates until he has received 20s. in the pound, and whether it ma}' turn out that the drawer is surety for the acceptor or the acceptor is surety for the drawer, yet the surety has no right to receive anything until the bill- holder has received 20s. in the pound. Therefore it is perfectly clear that if Fothergill & Hankey's estate had been wound up in bankruptcy, or liquidation or composition, and 20s. in the pound had not been real- ized, the holders of the bills would have been entitled to have kept the 4s. in the pound they had got from Corry as well as the amount of the dividend or composition they got from Fothergill & Hanke}'. Then the sections of the Bankruptcy Act which have been referred to allow creditors to make, even after a liquidation, either a composition with the debtor, or to make what is described as an arrangement of the affairs of the debtor. Supposing they choose to make an arrangement of the affairs of the debtor, and the majorit}' bind the minority to enter into that arrangement, then, in m}' opinion, the equity of the suret}* in an arrangement which will probably produce more than 20s. in the pound to the principal creditor is this, — he may make up 20s. in the pound to the creditors, and take the arrangement in the place of the principal creditor. In that case he gets the debentures, and in my opinion that secures him against any injustice. Let me suppose in this instance that Cony, instead of paying 4s., paid 18s. in the pound, so that he had a substantial interest in these debentures, then he could have said, "There is your remaining 2s. in the pound; give me the debentures." Or possibly he might say, " Your right is only to get 20s. in the pound. These debentures are now salable for 5s. in the pound in the market ; go and sell them, and take 2s. in the pound to make 20s., and give me 3s." In that way he would get perfect justice ; therefore there is no difficulty in seeing that perfect justice is done to the surety. In point of fact, this estate is so insolvent that it is plain he could never get anything if it is wound up in the ordinal way. 2 1 The statement of facts is abridged, and the arguments of counsel, and concurring opinions of James and Baggallay, L. JJ., are omitted. — Ed. 2 Compare Ex -parte Watson, 42 L. T. Rep. 516, in which case the proceeds of a surety's property, placed to a suspense account by the creditor, was not treated as a payment by the surety, and therefore did not diminish the amount for which the creditor might prove against the principal. — Ed. 424 IN EE BAXTER AND RALSTON. [CHAP. IIL In re A. BAXTER and D. C. RALSTON. In the United States District Court, Southern District of New York, July 3, 1878. [Reported in 18 National Bankruptcy Register, 497.] The facts appear sufficiently in the opinion. Abbott Bros., for assignee. Hedfield & Hill, for creditor. Choate, J. Re-examination of proof of debt. The Canadian Bank of Commerce became the holder for value before maturity of two drafts drawn by the bankrupts on their correspondents in Liverpool, who accepted the same. Since the dishonor of the draft, the bank has received from the ac- ceptors fifty per cent of the amount due on them, without prejudice to the rights of the bank against other parties. The drafts were drawn against consignments of merchandise, which the drawers undertook to make, but which they failed to make. It is claimed that the acceptor has released the drawer from all de- mands. It is now insisted b}' the trustee of the bankrupt that the holder of the draft can only prove for the amount thereof, after deduct- ing the payment made by the acceptor, but the register allowed the proof for the whole amount. The bankrupt is in this case the principal debtor, and the acceptor is the surety. It is conceded that but for the release of the drawer b}' the acceptor, the creditor would have the right to prove for the whole amount. Downing v. Traders' Bank. 1 But it is insisted that in this case, as the acceptor has released all his claims against the drawer, the creditor cannot prove for the whole, because the acceptor has no claim on the surplus after the creditors shall be paid in full. There is no merit in this position. If the dividend which the creditor shall be entitled to shall, with the sum received from the surety, exceed the whole amount of the drafts, that ma}' be a proper case for an application to the court to have this surplus disposed of, according to the equities of the parties, if the acceptor is then properly before the court ; meanwhile, to reduce the amount for which the creditor is to prove would certainly prejudice his rights, contrary to the conditions under which he accepted the money from the surety. He is entitled to prove for the whole amount, and if there shall be a surplus it can then be determined to whom it belongs. The entry of a judgment does not affect the right to prove the debt. Petition dismissed. 1 11 N. B. R. 137. SECT. I.] IN KE BAXTER AND RALSTON. 425 Further argument having been granted, the following opinion was rendered Aug. 10, 1878 : Choate, J. This case was submitted on briefs of counsel, and a further oral argument has been granted on application of the assignee, on account of the very large amount involved in the decision. After a careful reconsideration of the matter, I am still of opinion that the bank has a right to prove against the bankrupts for the whole amount of the drafts held by it. The receipt by the bank from the acceptors of the drafts, who, on the facts shown, stood in the relation of sureties for the bankrupts, of fifty per cent in release of all claims on them, did not operate to dis- charge any part of the debt of the bankrupts to the holder of the drafts. It was not accepted as paj'ment in part of their debt to the holder, nor was the sum so paid indorsed on the drafts as part payment, nor was there any agreement to that effect. On the contrary, it was agreed to be received without prejudice to the rights of the holder as against other parties on the drafts. The. rights thus expressly reserved cer- tainly included the right to present their claim against the bankrupt for its full amount. There is no question that the holder of commercial paper may prove for the full amount against all the parties liable, as he may maintain actions against them all. The holder was not bound to receive this dividend from the suret} T . He might have rested on his right to sue him, which would not in any way have prejudiced his right to prove the debt for the full amount against the bankrupt, unless and until the surety should have paid the drafts in full, in which case, by the terms of the Bankrupt Law, the surety would have been subrogated to the rights of the holder. Instead of suing the surety, the holder accepted fifty cents in full as against him without prejudice to his rights against the bankrupt. Even without this reservation, the surety, having paid part of the debt only, would have no right to prove for that part against the bankrupt unless the holder should fail to prove the debt ; but the right of the holder would still remain to prove for the whole debt, partly for himself and partly as trustee for the suretj' (Section 5070). Now, the reservation of rights agreed upon in this case had no meaning, it seems to me, if it did not save the existing right of the holder to prove, for his own benefit, on the whole debt, until he received, with the payment made b} T the surety, full satisfaction of the debt. 1 Such being the rights of the parties at the time the dividend was received from the suret}-, the subsequent release b}' the surety of all claims against the bankrupt cannot possibly affect the rights of the holder, who was no party to that release, except so far as those rights 1 Downing v. Traders' Bank, 2 Dill 136, Accord. In re Howard, 4 N. B. R. 571 ; In re Sterling, 4 Hughes, 453 (semble), Contra. In the two cases cited in the preceding paragraph, the amount paid by the surety it was recognized, might be proved l>y him against the creditor. — Ed. 426 IN RE SOUTHER. [CHAP. Ill are held by him, not for his own use and benefit, but for the benefit of the surety. The surplus that the holder may receive from the bankrupt, upon proof of the debt in full, after full satisfaction of the debt, would in- deed, but for the release, belong to the surety ; and this surplus the surety might, as against the holder, deal with as he chose ; but the surety is not a party to this proceeding, and therefore what may be the effect of the dealings between the surety and the bankrupt on the right to this surplus may and should be left till it appears that there will be such a surplus. As it is conceded in this case that there will be none, the point is not material ; but the proper order to make in the matter is, that the holder be allowed to prove for the whole amount of the drafts, reserv- ing all questions that ma} r arise in case he should be entitled upon such proof to dividends, which, together with the sum received from the suret3', will exceed the whole amount of the drafts and interest. In re SOUTHER. Ex parte TALCOTT. In the United States District Court, District of Massachusetts, March, 1874. [Reported in 2 Loivell, 320.] Proof of Debt. — Payment by Surety. — This was a question upon evidence certified by the register, concerning the debt offered for proof by Frederic Talcott, and called for a decision whether the amount paid by an indorser of a note, after the bankruptcy of the maker, and after an affidavit in due form had been made by Talcott for proving the debt, but before the first meeting of the creditors, and there- fore before the debt could be admitted to proof, should be deducted from the debt as a payment pro tanto. The case was not argued. Lowell, J. The general rule undoubtedly is that the holder of a note may prove against all the parties for the full amount, and receive dividends from all until he has obtained the whole of his debt with interest. It is likewise the general rule, that what he has received from one party, or from dividends in bankruptc} 7 of one party to the note, are payments which he must give credit for, if he afterwards proves against others. Sohier v. Loring, 1 Ex parte Wyldman, 2 Ex parte The Royal Bank of Scotland, 3 Ex parte Tayler. 4 I am of opin- ion that this latter rule must be confined to cases in which the payment has been made by the person primarily liable on the note or bill. The two cases last above cited cover the whole ground of this inquiry. In 1 6 Cush. 537. 2 2 Rose, 197. » 1 Atk. 109. 4 1 DeG. & J. 302. SECT. I.] IN RE SOUTHER. 427 the former, it was held that such credit must be given for dividends received after a claim had been made in bankruptcy, but before the debt was actuall}' and formally proved ; and, in the latter, that when such payments had been made by the drawer of a bill of exchange and the proof was offered against the acceptor, still the credits must be given. One of the learned justices, however, in giving judgment, reserved his opinion whether the rule would apply if the holder offered his proof as a trustee for the drawer, or for the estate of the drawer. The theory of this decision is that no creditor can prove for more than his actual debt, as it exists at the time of proof, without obtaining an undue advantage over other creditors. The answer attempted to be maintained by the creditor in that case was that a holder ma}' sue for the whole debt at law against the party primarily liable, and hold the money for whom it may concern. For this position, he cited Jones v. Broadhurst, 1 then recently decided. The court of appeal in bankruptcy expressed doubts whether Jones v. Broadhurst stated the true rule at law, 2 and decided that the rule in bankruptcy, at all events, was well settled against it, unless, perhaps, the holder proved that he was act- ing as trustee for some one whose liability was subsequent to that of the bankrupt. It seems to me, however, that the argument in favor of the proof in full was sound. The better opinion at common law is that pa3'ment by a drawer or indorser does not exonerate the acceptor or maker, unless the promise of the latter was for the accommodation of the former, or there is some other equity which makes the note or bill the debt of the part}* who has made the paj'ment, or unless he has made it at the request or for the benefit of the acceptor or maker. Byles on Bills (10th ed.), 221, and cases there cited. If this be not the rule at law, still I consider it to be so in bankruptcy. The statute, section 19, adopting the equities of the case, declares that if a surety, or other person liable for a bankrupt (and this undoubtedly includes indorsers), pays or satisfies the debt, or if he remains liable for the whole or any part of it, he ma}' prove it in bankruptcy, or require the creditor to prove it, in order that he may have the benefit of the dividends. This law does not expressly meet the present case, because the indorsers i 9 C. B. 173. 2 . There is no foundation for this doubt. The cases uniformly support the doctrine of Jones v. Broadhurst. Randall v. Moore, 12 C. B. 261 ; Williams v. James, 19 L. J. Q. B. 445 ; Agra Bank v. Leighton, L. R. 2 Eq. 56 ; Woodward v. Pell, L. R. 4 Q. B. 55 ; Thornton v. Maynard, L. R. 10 C. P. 695 ; Andrews v. Toronto Bank, 15 Ont. Ap. 648 ; Bird v. La. Bank, 93 U. S. 96 (St. of L. not a bar) ; Davis v. McConnell, 3 McL. 391; Granite Bank v. Fitch, 145 Mass. 567; Mechanics' Bank v. Hazen, 13 Johns. 353; Madison Bank v. Pierce, 137 N. Y. 444 ; Concord Bank v. French, 65 How. Pr. 317 ; Logan v. Cassell, 88 Pa. 288; Bank of Amiens v. Senior, 11 R. I. 376. If the indorser has paid a part of the amount due on bill or note the holder may collect in full, and hold as a trustee for the indorser pro tanto. Johnson v. Reunion, 2 Wils. 262 ; Walwyn v. St. Quiutin, 1 B. & P. 652 ; Reid v. Furnival, 1 Cr. & M. 538 ; North Bank v. Hamlin, 125 Mass. 506 ; Madison Bank v. Pierce, 137 N. Y. 444 ; Ward v. Tyler, 52 Pa. 393. — Ed. 428 BAKDWELL V. LYDALL. [CHAP. III. here have neither satisfied the debt, nor do they remain liable to pay it, but they have taken an intermediate course, by paying a part for a full release of their own liability. Under these circumstances, in the absence of an}' stipulation one wa} T or another about the maker of the note, who was already a bankrupt, the law will imply that the holder is to prove the whole debt ; and, if the dividends are more than enough to pay him in full, after crediting to the surety what he has received from him, the creditor will hold the surplus for the benefit of the surety. This, though not within the exact language of section 19, is fully within its spirit. It is not, however, as a construction of that section that I find the law, but merely that the section recognizes a familiar equity, and takes for granted that a creditor ma} T prove the debt, notwithstanding payment in whole or in part b} r a surety, because he in fact proves as the trustee of the surety. The payment made by the indorser after the maker of the note was a bankrupt cannot be proved by the surety as mone}" paid, unless it comes precisely within section 19, because it had not been paid at the time of the bankruptcy. It must either be provable as part of the note in the hands of the holder, and for the benefit of the indorser, or not provable at all, and in the latter case it would not be barred by the discharge. This was one of the motives for the enactment that the surety may compel the creditor to prove ; and it takes for granted, as I have said, that the creditor might prove voluntarily. The case of Jones v. Broadhurst, and those which follow it on the one side, or differ from it on the other, deal merely with the fact, or the presumption, whether or not the payment is intended to discharge the debt of the principal debtor ; if not, the right of action remains good. The fact in this case is that the surety gave a certain sum for what is equivalent to a covenant not to sue him, and it is not for the bankrupt to say that his debt is thereby paid, when he has not furnished the means to pa\ r it. Proof admitted in full} BARDWELL and Others v. LYDALL. In the Common Pleas, Mat 3, 1831. [Reported in 7 Bingham, 489.] Tindall, C.J. 2 This was an action upon a guaranty, contained in a letter addressed by the defendant to the plaintiffs in these terms, — 1 Ex parte De Tastet, 1 Rose, 10 ; In re Ellerhorst, 5 N. B. R. 144; Ex parte Harris, 2 Lowell, 568; Re Pulsifer, 9 Biss. 487, 490, 14 Fed. Rep. 247 s. c. (semble) ; Dearth v. Hide Bank, 100 Mass. 540 (semble) ; Ames v. Huse, 55 Mo. Ap. 422, Accord. Cooper v. Pepys, 1 Atk. 106; Ex parte Leers, 6 Ves. 644; Ex parte Worrall, 1 Cox, 309 ; Ex parte Tayler, 1 De G. & J. 302 ; In re Oriental Bank, 6 Eq. 582 ; Re Blackburne, 9 Morrell, 249, 252 (semble), Contra. — Ed. 2 Only the opinion of the court is given. — Ed. SECT. I.] BARDWELL V. LYDALL. 429 " In consideration of your giving credit in the way of }'Our trade to Lionel Maybew, I guarantee to you the payment of any debt which he may contract with you from time to time as a running balance of account, to any amount not exceeding £400." It appeared at the trial tbat the plaintiffs, on the faith of this guar- anty, had furnished Mayhew with goods to an amount far exceeding the £400 ,• and that Mayhew becoming embarrassed, assigned his effects to trustees for the pa}-ment of his creditors, 2^ ro rata, when the plaintiffs claimed a debt of £625 against his estate, and received from the trustees, in common with the rest of his creditors, a dividend of 8s. Id. in the pound on the whole debt. The present action was brought to recover the difference between the dividend and the whole debt, being a sum less than the £400 secured by the guaranty. On the part of the defendant it was contended, that the plaintiffs had no right to deduct the whole sum received as a dividend from the gross amount of the debt, and to hold the defendant liable on the guar- anty for the residue of the demand, up to the extent of the guaranty ; but that the dividend received by the plaintiffs was to be applied rat- ably to the whole debt, as well the part covered by the guaranty as the part which was left uncovered, and consequently a ratable deduc- tion was to be made for the sum covered by the guaranty. The defend- ant had paid into court the sum of £118, and the jury found a verdict for the plaintiffs, with £238 18s. damages, being the full amount of the debt remaining due to them ; leave being reserved to the defendant to move to reduce the damages, if the court should be of opinion that the ratable deduction was to be made on the principle contended for by him. And upon consideration, we are of opinion that such deduction ought to be made. If the whole amount of the debt from Mayhew had not exceeded the £400, it is clear that the defendant would have received the full benefit of the dividend of 8s. Id. in the pound, as he could not have been answerable under the guaranty for more than the remainder, after the deduction of such dividend ; and although the amount of the debt does in this case exceed the £400, and thereby the position of the creditor is so far altered, that one part of his debt, viz. to the extent of £400, is guaranteed, and the remainder not, still there seems no rea- son why the application of a payment of so much in the pound upon the whole debt should in any way be affected by the collateral circum- stance of the guaranty ; or why such payment should not be applicable as well to the £400 guaranteed as to the part uncovered by the guar- anty. For, suppose the sum which exceeds the £400 had been cover- ered by the guaranty of another person, could it be contended that the plaintiffs might have applied the whole of the dividends to either part of the demand at their own election, and thus have varied, at their own pleasure, the extent of the responsibility of the two sureties? In the case supposed, we think each of the sureties might have claimed a 430 BAKDWELL V. LYDALL. [CHAr. Ill ratable deduction, out of each pound of the amount of debt to which their respective guaranties extended. And if so, the same result ap- pears to us to follow, whether the excess beyond the £400 is covered by the guaranty of a stranger, or the creditor is contented to become his own surety for the residue, &c, and to look for payment of it to the principal debtor alone. Again, suppose in the principal case the defendant had paid the £400 to the plaintiffs before the plaintiffs had made their claim against May- hew's estate. There could be no doubt, in that case, that if they proved the whole demand, they would have been trustees for the defendant for the dividend on the £400 ; or, if the}- had declined to prove, that the defendant might have received the dividend on that sum, if the trust- deed admitted of such an arrangement. And what difference can it make in the equitable rights of the defendant, whether such payment is made before, or is sought to be enforced against him after, the pay- ment pro rata out of the estate of the principal? Indeed, the case seems to be decided as to the right of the suretv to claim the benefit of the deduction now contended for, in a court of equity, by the case of Pale}- v. Field, 1 which is in substance and effect the same as the present. The Court there held, that the dividend was received on each portion of the debt, and that as to the portion of the debt covered by the guaranty, the creditor was a trustee for the surety. The Master of the Rolls there observing, " that unless this were so, it would follow that the guaranty would operate to compel the surety to contribute, in effect, to indemnify Field against a loss, against which it was expressly provided that he should not be indemnified, viz., a loss occasioned by his advancing more than the sum of £1,500," the extent of the guaranty limited by the bond. The argument on the part of the plaintiffs proceeds on the ground, that the}- may treat the payment as a payment in gross of part of the debt ; and, consequently, have the right to deduct it, and to claim the remainder under the guaranty. And, further, it is urged, that what- ever may be the decision or doctrine of a court of equity, this is a ques- tion in a court of law, and the deduction cannot be supported upon any legal ground. It appears to us, however, that both these objections are answered by adverting to the evidence given in the cause. The payment was not a payment in gross, but a payment specifically made by the trus- tees, and specifically received by the plaintiffs, as so much in each and every pound of the whole amount of the debt; so that there is a speci- fied appropriation of payment to each and every part of the demand, which appears to us, in law, to operate as a part-payment of the £400, as well as a part-payment of the residue. Upon this short ground, we think, in the present case, the same deduction may be made in law, to which the defendants appear en- 1 12 Ves. 435. SECT. I.] GEAY V. SECKHAM. 431 titled in reason and good sense, without compelling them to have recourse to a court of equity, and accordingly, we think the present rule should be made absolute. Bide absolute. 1 GRAY v. SECKHAM. In Chancery, before Sir G. Mellish and Sir W. M. James, L. JJ.. June 19, 1872. [Reported in Latv Reports, 7 Chancery Appeals, 680.] At the time of making the promissory note mentioned below, the London and County Banking Company were the bankers of the Gelynog Llantwit Colliery Company, Limited. On the 10th of May, 1865, S. L. Seckham and three other directors of the Colliery Company made a promissory note, by which they promised to pay to another director, H. Strong (who was manager of a branch of the bank), or order, the sum of £2,000. This note was made for the accommodation of the Colliery Company, and for the purpose of being transferred to the bank as a security for any balance which might be due from the Colliery Company to the bank ; and the note was accordingly indorsed by Strong to the bank. On the 20th of July, 1866, an order was made for winding up the Colliery Company, and £3,659 was on the 7th of December, 1867, found in the winding up to be the balance due by the Colliery Company to the bank. On this sum of £3,659 a dividend of £1,051 became pay- able to the bank in the winding up. In 1868 an action on the note was brought by the bank against Seckham, in which action judgment was obtained ; and in 1870 Seck- ham paid the bank £2,067, principal and interest due on the note. Seckham then claimed so much of the dividend of £1,051 as was due in respect of £2,067. The bank, on the other hand, claimed all the dividends coming to them in the winding up until they had received full payment of the sum due to them. The question was brought before the court on a special case ; and the Vice-Chancellor Bacon, on the 26th of January, 1872, decided that Seckham was entitled to a part of the dividend received, the bank taking thereout so much as would make up the proportion which they would have received upon the residue of the debt proved beyond the £2,067 if that £2,067 had been expunged, and Seckham taking the remainder. The bank appealed. 1 Raikes v. Todd, 8 A. & E. 846 ; Thornton v. McKewan, 1 H. & M. 525 ; Goodwin v. Gray, 22 W. R. 312; Gee v. Pack, 33 L. J. Q. B. 49; Hobson v. Bass, 6 Ch. 792, Accord. — Ed. 432 GRAY V. SECKHAM. [CHAP. ITI Mr. Amphktt, Q. C, and Mr. Benjamin, for the appellants. 1 Mr. Kay, Q. C, and Mr. R. E. Turner, for Mr. Seckbam, were not called upon. Sir G. Mellish, L. J. This is an appeal from a decision of the Vice-Chancellor Bacon on a special case. [His Lordship then stated the questions asked by the special case.] The Vice-Chancellor has de- cided that Mr. Seckham is entitled to a portion of the dividend on the £3,659, and I am of opinion that his decision is correct. We have to consider two questions — first, whether evidence can properly be given that this contract by the directors was realby a con- tract of suretyship ; and secondly, if it was a contract of suretyship, then, whether from the form of contract or from the circumstances stated in the special case, we can infer that Mr. Seckham agreed that, on the Collier}' Company being wound up, any dividend he might other- wise be entitled to should go to the bank until the bank had received 20s. in the pound on the debt which might be due from the company to the bank. Now, as to the facts of the ca,se, it appears to me beyond all question that this is simply the ordinary case of a customer proposing to over- draw his account at a bank, and offering as security the promissory note of third persons. I am of opinion that it makes no difference at all that the company are not themselves parties to the note. I am also of opinion that the form of the note makes no difference, for the agreement was in substance that the directors were to give this as a security for the payment of the balance due. Then comes the question whether that was a security for a part of the debt. It seems to be admitted that, if it was only a security for part of the debt, then, if one of the makers of the note has paid the amount, he is entitled to the benefit of the dividend quoad that part. Yet it was argued, in the first place, that this was not a security for a part of the whole debt of £3,659, but was simply a security for the balance which might remain unpaid. I am of opinion that it was really a security for a part. The ques- tion, if it arose in a court of common law, would simply be, what was the consideration for this note? It is quite plain that there was no consideration at all as between the four directors who signed the note and Captain Strong, nor between Captain Strong and the bank. The bank never advanced any money or gave an}' consideration to Captain Strong, and the only consideration for the note is the balance which might from time to time be due from the company to the bank. There- fore it was a note given by third persons, the only consideration for which was a debt to be due, not from any person who signed the note, but from the company ; and the bank has so treated it, because the company having been ordered to be wound up, the bank brought their action against Mr. Seckham on his liability, and recovered from him the whole sum. 1 The argument for appellants is omitted. — Ed SECT. I.J GRAY V. BECKHAM. 42? Upon this the question arises, whether there is anything to take this case out of the ordinary rule that, when a surety is only surety for a part of the debt, and has paid that part of the debt, he is entitled to receive the dividend which the principal debtor pays in respect of that sum which the surety has discharged. I cannot see that there is anything to take this case out of the ordi- narv rule. No doubt it is now not unusual for contracts of guaranty to be expressly worded so as to show that it is intended that such divi- dends may be kept ; and of course by express words such a charge may be effected, as was done in the case of Midland Banking Co. v. Chambers. The question for us to decide is whether such an agree* ment has been entered into. We cannot infer this from the simple fact that the instrument of suretyship is in the ordinary form of a prom' issory note. No doubt by the form of the note the persons who sign the note appear, so far as the note is concerned, to be the principal debtors ; but it may be always given in evidence what the consideration of the note really was, and here it appears that the only consideration for the note was a debt due from third parties. The truth is that the introduction of such provisions into contracts for suretyship is a modern invention ; and certainly suretyship by a promissory note is far older than those provisions, and has existed as long as promissory notes have been used in this country. I am therefore of opinion that this case comes within the ordinary rule, and I do not think that there is in this respect any difference be- tween a bankruptcy and a winding up ; for in the winding up of a com- pany it is obvious that there must be a settlement of everj T possible •jlairu against the company. Then Mr. Seckham having, at the request of the company, and for their interest, executed this promissory note, and having paid the £2,067, he is a creditor of the company for that amount ; and he would be eutitled to prove against them for it. It is quite clear that the bank cannot also be entitled to prove, because if they were, the company would be paying the dividend twice over on the same debt. Then the question is, which of the two is entitled to the dividend? It is quite obvious that Mr. Seckham, not having pledged that dividend, is the person who is entitled to receive it, he having in fact paid the bank, and the bank having received from him that part of the debt which was due to the bank. Upon the whole, I am of opinion that the decision of the Vice- Chancellor was right, and that this appeal must be dismissed with costs. 1 Sir W. M. James, L. J. I am of the same opinion. The distinction which has been raised between making a promissory note as surety to 1 Ex parte Holmes, Mont. & Ch. 301 ; Ford v. London Bank, 5 Vict. L. R. (Eq.) 328, Accord. Brough's Est., 71 Pa. 460 (semble), Contra. Compare Ex parte Brook, 2 Rose, 334, 336, and note (a). — Ed. 28 434 GKAY V. SECKHAM. [CHAP. IIL a bank and making a promissory note and depositing it as security to the bank, is too subtle for me. The respondents then asked that the order made by the Vice-Chan- cellor might be varied by directing that Mr. Seckham should receive the proportion of dividend due on the sum paid by him without con- sidering the sum paid by him as having been expunged. Sir W. M. James, L. J. I am of opinion that this order must be rectified in the way suggested. The cases Ex parte Turner, and Ex parte Rushforth, were cases under the bankruptcy laws, and it is quite clear that they may be explained by reference to the then state of the law as to payments by sureties. In the then state of the law a surety paying a debt after the bankruptcy had no means whatever of proof, though he was entitled to his remedy against the bankrupt to whom the certificate was no discharge. That was the remedy of the surety, and one can easily understand that it would be according to common sense and common equity for the principal creditor to claim the same rights as if the suret}' had paid the debt. But I cannot understand how it is possible to apply the principle not to a case of bankruptcy but to a case of winding up, which is the administration of an estate exactl}' similar to the administration of the estate of a deceased person. In that case, whether the debt is paid at one moment or at another does not in the slightest degree affect the right of proof against the estate, which has always been liable to exactly the same amount of dividend. I am of opinion that there is no analogy in this respect between the cases of bankruptcy and winding up. It is clear that no harm could, in any conceivable state of things, be done to the creditor by the mode in which the debt was paid, either at one particular moment or another ; and therefore there is no ground for making the deduction which has been directed by the order named. The point is not raised by the special case, and I am quite sure that if it had been, it would not have been considered reasonable. Sir G-. Mellish, L. J. I am of the same opinion. It appears to me that there is a great deal of difference between the winding up of a company and an ordinary bankruptcy, in this respect, that every pos- sible claim and demand against the company has to be settled under the winding up. Now here, directly the debt of £2,067 was paid, there was a debt due from the company to the surety who paid it. It appears to me that he must be entitled to receive the whole of the dividend in respect of that debt, and I do not see what equity there is to de- prive him of that part which he is deprived of by the order of the court below. The order of the court below must be affirmed with this variation, and the appellants will pay the costs of the appeal. SECT. I.] MIDLAND BANKING CO. V. CHAMBERS. 435 MIDLAND BANKING CO. v. CHAMBERS. In Chancery, before Sir C. J. Selwyn and Sir G. M. Giffard, L. JJ., March 23, 1869. [Reported in Law Reports, 4 Chancery Appeals, 398.] This was an appeal by the defendants from a decree of Vice-Chan- cellor Malins. 1 The plaintiff's were bankers at Sheffield. In 1865 they agreed to allow Mercer, a customer of theirs, to overdraw his account, on the following guaranty being given them by J. Thorpe. " In consideration of your opening an account with Mr. F. J. Mercer, and advancing to him at any time the sum of £300 at my request, I hereby guarantee to you the repayment of all moneys which shall at any time be due from him to you on the general balance of his account with you, and I hereby declare that this guaranty shall be a continuing guaranty to the extent, at any one time, of £300 ; and shall not be considered as wholly or partially satisfied by the payment or liquidation at any time or times hereafter of any sum or sums of money for the time being due upon such general balance as aforesaid ; but shall extend to cover and be a security for every and all future sum and sums of money at any time due to you thereon, notwithstanding any such pay- ment or liquidation. And I further declare that you may grant to the said F. J. Mercer, or to any drawers, acceptors, or indorsers of bills of exchange or promissoiy notes received by you from him, any time, or other indulgence, and compound with him or them respectively without discharging or satisfying my liability ; and that all dividends, composi- tions, and payments received from them or him respectively, shall be taken and applied as payments in gross, and that this guaranty shall apply to and secure any ultimate balance that shall remain due to the said compan}* ; and I further declare that this guaranty shall continue to be binding notwithstanding an} r changes that may from time to time take place in the shareholders in the said Midland Banking Company, Limited." On the 6th of January, 1866, Mercer assigned all his estate and effects to Thomas Chambers and John Thorpe in trust for the payment of his debts, to be applied in the same manner as if he had been adjudged bankrupt. This deed was registered under the Bankruptcy Act, 1861, §194. At the time of the execution of the deed there was due from Mercer to the plaintiffs on the balance of his account the sum of £410 4s. lid. In May, 1866, Thorpe paid over to the plaintiffs £300 in discharge of his guaranty. Mercer, it appeared, had given to Thorpe a mortgage to indemnify him against all claims on the guaranty. The mortgaged 1 Law Rep. 7 Eq. 179. 436 MIDLAND BANKING CO. V. CHAMBERS. [CHAP. Ill property was sold by the trustees of the creditors' deed, and the £300 paid to Thorpe, and the £300 which he paid to the plaintiffs was, in fact, the £300 which he thus received under the counter security. The trustees contending that the plaintiffs were entitled to prove only for £110 46'. lie/., being the balance due from Mercer after deducting the £300, the present bill was filed asking that the trusts of the creditors' deed might be administered by the Court, and that it might be declared that the plaintiffs were entitled to a dividend on their whole debt. Vice-Chancellor Malins made a declaration accordingly, and the trus- tees appealed. Mr. Cotton, Q. C, and Mr. Kekewich, for the appellants. 1 Mr. De Gex, Q. C, and Mr. Bristowe, for the plaintiffs, were not called upon. Sir C. J. Selwyn, L. J. There are two questions in this case. One as to the construction of the guaranty, the other as to the effect of Thorpe having been fully paid by means of his counter-security. It is settled by Thornton v. M'Kewan, 2 and other cases, that where a surety who is liable for part of a debt has paid the whole of what he is liable for, he is entitled to stand in the place of the creditor to that extent against the estate of the bankrupt debtor. The surety may, however, in his contract of suretyship agree to waive this right for the benefit of the creditor, and the question is, whether the surety did so in the pres- ent case. I am of opinion that the clause in the latter part of the guar- anty was intended to exclude the surety from the right to have a share in the benefit of the proof, and to allow the creditor to receive the full amount of the dividend. 3 This being so, there only remains the ques- tion whether the position of the creditor is affected by the fact that the surety has been fully paid by means of the security given him by the debtor. This question is answered by Ex parte Hope, 4 which differs from the present case only in this, that there the debt was joint, and the security given to the surety was upon the separate estate of one of the bankrupts ; but the iudgment treats that distinction as clearly im- material. The Lord Justice Knight Bruce, then Chief Judge in Bank> ruptcy, says 5 : "The agreement would, I conceive, have been clearly effectual and binding between the creditor and surety if the surety had not, by means of his mortgage, or otherwise, received payment from the assignees or from the bankrupt's estate, and if so, I do not see why their redemption of the mortgage, or the payment of the surety in any other way out of the bankrupt's estate should vary the rights of the creditor. I think that they must take the surety's rights, if they take them at all, as he had them himself; that they cannot make any claim 1 The argument for the appellants and the concurring opinion of Giffard, L. J., are omitted. — Ed. - 1 II. & M. 525. 3 Ex parte Hope, 3 M. T>. & D. 720 ; Ex parte Miles, De Gex, 623 ; Earle v. Oliver. 2 Ex. 71 ; Re Sellers, 38 L. T. Rep. 395; Ex parte National Provincial Bank, 17 Ch Div. 98 ; In re Sass, '96, 2 Q. B. 12; In re Gillespie, L. R. 19 Ir. 198, Accord. —Ed. 4 3 M. D. & D. 720. 5 3 M. D. & D. 725. SECT. I.] ELLIS V. EMMANUEL. 437 against the creditor's dividends which the surety could not have made ; that he could not have made this claim, and that their petition must be dismissed. I may observe that I have not stated the facts specifically as they appear, nor, indeed, do all the facts clearly appear ; but I have meant to state, and I believe that I have stated, the oase in a manner as favorable as possible to the petitioners. The debtor was, in truth, a firm of several persons in partnership together, and the mortgaged es- tate seems to have been the separate property of one of the firm, a cir- cumstance which appears to me to make no difference, at least in favor of the petitioners. I suppose that if it had been made originally to the respondents, it would not have affected their right of proof against the firm." If such a transaction as this were entered into with any fraudu- lent purpose, different considerations would arise ; but nothing of the kind is suggested. The case is the simple case of a surety who is fully paid by means of a counter-security given him by the bankrupt debtor, and the appeal must be dismissed with costs. 1 ELLIS and Another v. EMMANUEL. In the Court of Appeal, February 23, 1876. [Reported in 1 Exchequer Division, 157.] The judgment of the Court (Lord Cairns, L. C, Blackburn and Brett, JJ.) was read by — Blackburn, J. 2 In this case Thomas Robert Etheridge, as principal debtor, and others (seven in all, if we reckon each firm as a separate person), as sureties, executed a bond to the plaintiffs. The instrument is not in all respects artificially drawn, but in sub- stance it is this. The eight persons bound themselves, and every two or more and each of them, jointly and severally, in the penal sum of £14,000. The condition of the bond was that if the eight parties, or any or either of them, paid the principal sum of £7,000 by certain instal- ments, at times specified, the bond should be void and of none effect, otherwise it should remain in full force. Then followed a proviso, on the effect of which we expressed our opinion at the time of the argument. And then a second proviso, that four of the sureties, including the now defendant, " shall not nor shall either of them be liable under or by virtue of the said bond, whether by reason of a joint or of a several action or demand, for a sum or sums exceeding altogether in debt or damages £1,300." Then a similarly worded proviso, that two others of the sureties shall 1 Ex parte Hope, 3 M. D. & D. 720, Accord. — Ed. Only the opinion of the court is given. — Ed. 438 ELLIS V. EMMANUEL. [CHAP. Ill not be made liable for more than £700 ; and another proviso, that the seventh suret}' shall not be liable for more than £400. The aggregate of those four sums of £1,300, two of £700, and one of £400, is exactly £7,000. I think, on the construction of this instrument, that the whole seven sureties jointly and severally guaranteed the whole £7,000, and there- fore, that any one of them might be forced to pay more than his just proportion of what remained due. For example, if the principal debtor paid on" £6,000, leaving £1,000 only due, any one of the first four sureties might have been forced to pay the creditor the whole £1,000. But, on paying more than his just proportion, he would be entitled to contribu- tion from the other sureties, on the ground that they were all liable for the same debt. The limits put on the amounts which could be recovered from the sureties respectively would affect the amount which each was to contribute, but would not prevent their being all liable to contribution. But if the bond had been framed, as it might have been, so that each surety did not guarantee the whole £7,000 jointly with the others, but that each of the four first-named sureties should each guarantee sev- erally £1,300, parcel of the £7,000, and that each of the two next named should each guarantee severally £700, other parcel, and the last surety guarantee severally £400, the residue, the result would be different. There, if £6,000 was paid off, the creditor probably would be impliedly bound to apply the payments ratably to every part of the £7,000, or at least might easily, by express stipulation, be bound to do so ; and if he did so apply them, he could not recover the whole £1,000, remaining due from one of the sureties in the first category ; for, six sevenths of the £1,300 being paid off, the surety would only be liable for the remain- ing seventh, or £145 some shillings and pence, and no more; and there could be no contribution between the sureties, because they were not liable for the same debt. The practical difference between the two forms of security would be that in the first case the creditor can recover the whole from any of the sureties who are solvent, leaving to them the trouble of getting contribution from the others, and throwing on them the loss if any of their co-sureties became insolvent. This is an advantage which a creditor ma}* fairly stipulate for, and which we have no right to take away from him if he has stipulated for it. In the case now before us the principal debtor made a liquidation arrangement at a time when £6,020 lis. of the £7,000 originally secured to the plaintiffs on the bond remained unpaid. They proved for that amount, and received dividends amounting to 9s. 2d. in the pound on that amount. But after giving credit for that amount considerably more than £1,300 was due on the bond at the time when the Court below were applied to, to allow execution to issue. The Court of Exchequer have allowed execution to issue for £850, the difference between £450 paid into Court and £1,300, the limit of the defendant's liability. SECT. I.] ELLIS V. EMMANUEL. 439 It was contended that the} - were wrong. It was said that the divi- dends are by law applied to each pound of the debt ratably, which is unquestionably true ; and it was argued that the defendant was entitled to take credit for 9s. 2d. in the pound on the £1,300, just as he would have been if his contract had been not to be surety for the whole £7,000, with a provision limiting his lia,bility to £1,300, but to be surety for £1,300, parcel of the £7,000. If this was so, the amount for which execution has been allowed to issue is considerably too large. I have, however, come to the conclusion that the Court below were right. The real question, I think, is, whether a series of cases beginning with Ex parte Rushforth, decided by Lord Eldon in 1805, and ending with Gray v. Seckham, decided by the Lords Justices in 1871, apply to this case. These decisions are several of them in Courts of Appeal of co-ordinate jurisdiction with this Court, and are clearly binding upon us ; and I do not think we ought to make nice distinctions, or depart from these cases, unless there is a real solid distinction between these cases and the present. But I think there is a real solid distinction. I think that the class of cases referred to do not lay down any gen- eral doctrine that where there is a surety, with a limit on the amount of his liability, for the whole of a debt exceeding that limit, he is entitled to the benefit of a ratable proportion of the dividends paid on the whole debt; but only that where the surety has given a continuing guaranty limited in amount, to secure the floating balance which may from time to time be due from the principal to the creditor, the guaranty is as between the suret}' and the creditor to be construed, both at law and in equity, as applicable to a part only of the debt, co-extensive with the amount of his guaranty ; and this upon the ground, at first confined to equity, but afterwards extended to law, that it is inequitable in the creditor, who is at liberty to increase the balance or not, to increase it at the expense of the surety. In Ex parte Rushforth Lord Eldon seems to me to express this very plainly. There Richard Rushforth, the petitioner, had, along with the two bankrupts, entered into a joint and several bond for £10,000 to bankers, conditioned for the paj'ment, from time to time and at all times thereafter within two months after notice in writing, of the bal- ance that might be then due from the bankrupts to the bankers. At the time of the bankruptcy that balance was £20,000. The bankers proved that amount, and received dividends on it. Lord Eldon considered the matter much. He first, in March, 1804, after discussing all the points, ends an elaborate judgment b} T saying : " The rule certainly has been that where a man, engaged for the whole of a debt, pa} T s onby a part, he has no equity to stand in the place of the person paid. That brings it to the question, what is this engagement, whether for the whole or a part?" Another petition was presented, and final judgment was not given till the 5th of February, 1805, after nearly a year's consideration, and then Lord Eldon says: "The ques- tion comes round to this : whether, according to the true nature of such 440 ELLIS V. EMMANUEL. [CHAP. III. an engagement between all the parties in this bond and mortgage, it was competent to these bankers to go on without giving notice to the surety ; for this is a case in which they contracted to give him notice before forfeiture of the bond ; whether they were at liberty to swell the demand to his prejudice beyond the sum of £10,000. The agreement was to advance all such sums as should be required ; but it is limited by an express contract for an obligation to secure all those sums ; and the question is, whether that limitation in the extent of the obligation is not a sufficient ground for the inference that those sums were not to be extended beyond £10,000, to the destruction of eveiy right of the surety. Take the case of two sureties, each for the separate sum of £10,000 : each paying the principal creditor would be entitled to stand in his place for the sum paid. It would be ven r strong to hold that, as they have taken but one surety, he shall be in a worse situation. I think the bankers are not entitled in equit} T to sa}', as against the surety, that their demand is more than £10,000, the amount of the bond he has given, upon which he would be prima facie entitled to stand in their place : as to the residue of their debt, they ought to be considered, if I inay so express it, as their own insurers." He adds : " As this is a perfectly new case, I make the order with liberty to file a bill." Lord Eldon, in deciding this case, attaches much weight to the stipu- lation for notice. Subsequent decisions — Ex parte Holmes 1 and Gray v. Seckham — have settled that the result would have been the same had there been no such stipulation ; but what seems to me important is, that Lord Eldon's reasoning proceeds entirely on the ground that the surety was entitled in equity to treat this as a security for £10,000, part of the balance, because the bankers voluntarily swelled the balance beyond the £10,000 ; a reason not at all applicable to a security given for a sum ahead}' fixed and determined. The next case in order of date was Paley v. Field, 2 in 1806, before Sir William Grant. There the bond was conditioned for the payment of the floating balance due to the bankers, with a proviso that the surety should not be liable to pa}- "any sums of money to a larger amount than the sum of £1,500," the meaning of the parties being that the bankers should not be indemnified by the suret}' b} T virtue thereof for any loss which they should sustain by giving credit to the debtor beyond the sum of £1,500. Sir William Grant rests his judgment almost entirely on this proviso. He says 3 : " I hardly know how the parties could have more clearly provided, not merely that the plaintiff should not be called on to answer more than £1,500, but that with regard to him the creditor should be considered as limited to that sum." The next case in order of date that I find reported is Bardwell v. Lydall, before the Court of Common Pleas in 1831. There the guar- anty was, "of any debt which the principal may contract from time to time as a running balance of account to any amount not exceeding 1 Mont. & Ch. 301. 2 12 Ves. 435. 3 12 Ves. at p. 444. SECT. I.] ELLIS V. EMMANUEL. 441 £400." The decision of the Court was that the same rule applied at law as in equity. The Court say: "The amount of the debt does in this case exceed the £400, and thereby the position of the creditor is so far altered that one part of his debt, viz. to the extent of £400, is guaranteed, and the remainder not." In coming to this conclusion, that the guaranty was to be read as between the creditor and surety, even at law as a guaranty for £400, parcel of the balance, and not as a guaranty of the whole balance with a limit on the amount recoverable, the Court seem to have acted on Pale}' v. Field, 1 but perhaps carry the doctrine one step further than either Lord Eldon or Sir William Grant had done. In Raikes v. Todd, 2 in 1838, the Court of Queen's Bench decided the case on another ground, viz., that the guaranty was bad under the Statute of Frauds; but Lord Denman during the argument says that if that had not been so, they should have followed Bardwell v. Lydall. The next case is Ex parte Holmes, 3 before Lord Cottenham in 1839, sitting in appeal in bankruptc}'. In that case the petitioner accepted three bills of exchange, amounting in all to £523 15s. Gd. , for the accommodation of the bankrupt. The bankrupt deposited them with his bankers as a security for the floating balance. The petitioner was, therefore, a surety to the extent of £523 15s. 6d. to meet a floating balance, but from the manner in which the suretyship was created no such special ground as the notice in Ex parte Rushforth or the proviso in Paley v. Field 1 could exist, nor could anything turn on special words in the guaranty. The balance greatly exceeded £523 15s. 6c?., and the bankers proved and received a dividend of 2s. on the whole. Then the petitioner paid the bills. The Court of Review had allowed the petitioner the future dividends on the £523 15s. 6d. , but refused to make the bankers account for the 2s. in the pound already received by them. Lord Cottenham upon appeal said very truly that this was illogical, and that the petitioner was entitled to both or neither. He then refers to the fact that the bills were deposited to secure a floating balance, which in the result exceeded their amount. He cites Bardwell v. Lydall, Pale}' v. Field, 1 and Ex parte Rushforth, and then says: " If then the dividend received upon £523 15s. 6d. is to be attributed to that portion of the debt which was secured by the bills of Holmes, it is immaterial that the bankers had larger or other demands against the bankrupt." It seems to me that the principle he assumes is that a security of limited amount for a floating balance is, as between surety and creditor, a secm*ity for a portion of the balance only, and that the residue is unsecured. In Thornton v. M'Kewan, 4 in 1862, Wood, V. C, followed these decisions, and had no occasion to enter into an explanation of the principle. 1 12 Ves. 435. 2 8 A. & E. 846, 855. 3 Mont. & Ch. 30t, 316. * 1 H. & M. 525. 442 ELLIS V. EMMANUEL. [CHAP. IIL In Gee v. Pack, 1 in 1863, an action was bronght in the Court of Queen's Bench on this guaranty : " £300. On demand we jointly and severally promise to pay to Messrs. Gee & Co." (who were bankers), '• £300, with interest on same, to secure an advance now or hereafter on a banking account with Messrs. Pack & Linton." The question raised on demurrer to a plea was, whether the surety was entitled to credit for a proportionate part of the dividends received by Gee & Co. on the balance of their banking account, which, at the time the prin- cipal debtors entered into liquidation, exceeded £300. The decision was in favor of the surety on the ground that the case was undis- tinguishable from Bardwell v. Lydall. In Hobson v. Bass, 2 Lord Hatherley, in 1871, acting upon all these cases, states the question thus : "If a person guarantees a limited por- tion of a debt, all the authorities show that if he pays that portion, he has in respect of it all the rights of a creditor. The question is, whether the guarantor means, ' I will be liable for £250 of the amount which A. B. shall owe you,' or ' I will be liable for the amount which A. B. shall owe you, subject to this limitation that I shall not be called upon to pay more than £250.' The words of this guaranty are so similar to those in some of the cases cited that it would be splitting hairs to dis- tinguish them. The words ' at any time' are material, and I think the meaning of the instrument is, 'I guarantee the payment of all goods supplied, but my liability* is not to be increased by their amount exceed- ing £250. When it reaches that sum I am to be a surety for it with all the rights of a surety.' " The last case on the subject that I am aware of is Gray v. Seckham. There the suretyship was by means of a promissory note deposited bj 1 the principal with his bankers as a security for the floating balance, and the case so far was identical with Ex parte Holmes. 3 Lord Justice Mel- lish, in delivering judgment, states the point thus: "Upon this the question arises whether there is anything to take this case out of the ordinary rule that, when a surety is only surety for part of the debt, and has paid that part of the debt, he is entitled to receive the dividend which the principal debtor pays in respect of that sum which the surety has discharged." I have now cited and examined every case of which I am aware bear- ing upon this subject. In every one of them the limited suretyship was to secure a floating balance. And I think these decisions establish that in such a case the suretyship is, prima facie at least, to be construed as a security for a part onby of the debt, from which the consequence stated by Lord Justice Mellish follows. And I agree with what is intimated by Lord Hatherley in Hobson v. Bass, 2 that if a creditor, taking a limited security for a floating balance, means it to be a security for the whole of the debt, and not merely for a part, he should take care that this is clearly expressed, for the prima facie construction is l 33 L. J. (Q. B.) 49. " Law Rep. 6 Ch. at p. 794. 3 Mont. & Ch. 301. SECT. I.] MARSH V. PIKE. 443 the other way, and the Court ought not to split hairs or make nice verbal distinctions on the words used. But there is no case that I am aware of which lays down that where the suretyship limited in amount is for a debt already ascertained which exceeds that limit, it is prima facie to be construed as a security for part of the debt only. And I have failed to see any principle on which such a prima fftcie construction ought to be adopted. I think in such a case it is a question of construction on which the Court is to say whether the intention was to guarantee the whole debt, with a limitation on the liability of the surety, or to guarantee a part of the debt only. And, as I have already pointed out, I think the bond in the present case expresses an intention that the sureties should each guarantee the whole £7,000, though their liability respectively was limited to the stipulated amounts. It seems, therefore, to me that the Court below were altogether right, and that the judgment should be affirmed. The Lord Chancellor and my Brother Brett concur in this judgment, and in the reasoning on which it is founded. Judgment for the plaintiffs affirmed.* MARSH v. PIKE and Others. In Chancery, before Reuben H. Walworth, C, March 5, 1844. [Reported in 10 Paige, 595.] The Chancellor. 2 The facts in this case are not disputed ; and the only question is whether the complainant was entitled to the relief granted as against the defendant Towle, upon these facts : In January, 1839, the complainant, who was the owner of lot No. 29, Fourth Street, in the citj' of New York, gave to the defendant Pike his bond, con- ditioned for the payment of S3, 000 in three years, with interest thereon, pa} T able semi-annually. In April. 1841, the complainant conveyed the mortgaged premises to the defendant McLean, subject to the mortgage, the amount of which was deducted from the purchase-money, and which mortgage McLean agreed with the complainant to pay off and discharge. And in August of the same year McLean sold the prem- ises to the defendant Towle, subject to the mortgage as a part of the consideration of the conveyance, and which mortgage Towle agreed to pa} T off and satisfy. After the mortgage became due, the complainant called upon Towle to pay off and satisfy the bond and mortgage, so as to relieve him from his responsibility upon his bond ; but he neglected i Ex parte Nat. Prov. Bank, 17 Ch. D. 98 (semble). In re Sass, '96, 2 Q. B. 12 (semble), Accord. — Ed. 2 Only the opinion of the court is given. 444 MARSH V. PIKE. [CHAP. III. to do so. The effect of these several conveyances and agreements is, in equity, to place the complainant in the situation of a surety for the payment of the bond and mortgage, and to make the defendants Towle and McLean the principal debtors as to him ; the first being primarily and the latter secondarily liable to him for the payment of the debt. The complainant, therefore, if he had paid the bond and mortgage to Pike, would have been entitled to be substituted in Pike's place, not only as to the reined}' against the land x but also as to the equitable claim against McLean and Towle, who had agreed to pay off the mort- gage. This, however, was not his only reined}' ; although the assistant Vice-Chancellor rightly decided that the complainant could not compel his creditor to file a bill of foreclosure against the persons to whom the premises were subsequently conve}ed, when there was no good reason why the complainant did not pay his bond according to his agreement, and take an assignment of the bond and mortgage, and proceed against the land and the subsequent grantees thereof, for his indemnity. For Marsh has the right to come into this court to compel such subsequent grantees, as to whom he is in the situation of a mere surety, to pay off and discharge the debt for his protection and indemnity. Warner v. Beardsley ; 2 Lee v. Rook ; 3 Ranelaugh v. Hayes. Here, it is true, McLean was the person who had agreed directly with the complainant to pay off and discharge the mortgage, for his protection and indem- nity. But as Towle, the appellant, had entered into a similar agree- ment with McLean, and was moreover the owner of the mortgaged premises, he was properly joined in the suit. And the decree was right in giving to McLean a remedy over against Towle, who was in justice and equity bound to pay off and discharge the debt, as between himself and all the other parties to the suit. The part of the decree which is appealed from is therefore affirmed with costs. 1 Ely i'. Stannard, 44 Conn. 528 ; Shinn v. Shinn, 91 111. 477 ; Kiramey v. Wells, 59 111. Ap. 271 ; Josselyn v. Edwards, 57 Ind. 213 ; Hoffman v. Risk, 58 Iud. 113, 69 Ind. 137 ; Smith v. Otterman. 68 Ind. 432 ; Massie v. Mann, 17 Iowa, 131 (se7nble) ; Wheeler's Est., 1 Md. Ch. 80; Baker v. Terrell, 8 Minn. 195 ; Knoblauch v. Fogle- song, 37 Minn. 320 ; Greenwell v. Heritage, 71 Mo. 459 ; Orrick v. Durham, 79 Mo. 174 ; Brown v. Kirk, 20 Mo. Ap. 524 ; Woodbury v. Swan, 58 N. H. 380 (real surety) ; Stillman v. Stillman, 21 N. J. Eq. 126; Johnson v. Zink, 51 N. Y. 333, 52 Barb. 396 (real surety) ; McLean v. Towle, 3 Sandf. Ch. 117 ; Cherry v. Munro, 2 Barb. Ch. 6)8: Scott's Ap., 88 Pa. 173, Accord. — Ed. 2 8 Wend. 199. 3 Mose. Rep. 318. •^c £3 SE CT I 1 * MATHEWS V. AIKIN. ., ' MJCTHEWS and Others, Appe llan ts, v. AIKINjResp^dent. *. "In the CcptT OFAPPE ALi , New York,/K£cembe3i, 1848. qn> "^Xt. ^T-~lkL>J [Reported if^fCol^k'^^^' • S&*~£~y t/ ^/l Appeal from the Supreme Court in equity. Abraham Aikin filed his bill in the court of chancery before the Vice-Chancellor of the seventh circuit, against John Mathews and Oliver Orcutt, who appeared and defended, and against Edward Aikin, who suffered the bill to be taken as confessed. The case, so far as material to be stated, upon plead- ings and proofs was as follows : On or before the 22d of November, 1837, Edward Aikin, who was the son of the complainant, executed to James Hasbrook a bond secured by mortgage on certain real estate, bearing date December 6, 1836, conditioned for the payment of $1,300 in six equal annual instalments. At the time of the execu- tion of the bond and mortgage, Edward Aikin was indebted to one Theodore Wood in the amount thereof, and Wood being also indebted to Hasbrook, procured the bond and mortgage to be executed directly to him. At the time or soon after the bond and mortgage were given, the complainant, at the solicitation of said Wood and Hasbrook, executed upon the bond a sealed guaranty of the payment thereof. There was no evidence that the complainant executed the guaranty at the desire or request of Edward Aikin, the mortgagor. Edward Aikin was examined as a witness for the complainant, and on cross-examina- tion testified that he advised his father not to sign the guaranty, inform- ing him that he was under no obligation to procure a guaranty. The complainant claimed by the bill to be subrogated to the rights of the holder of the bond and mortgage for the purpose of reimbursing to himself the sum collected of him by suit on the guaranty. From a decree in favor of the complainant the defendants appealed to this Court. 1 Johnson, J. It is a general an d well established principle of equity t hat a surety, or a party who stands in the situation of a"surety, is entitled to be subrogated to all the r ights and remedies of the cr editor whose debt he is compe lled to pay, as to any fund, lien, or equity wh ich the creditor haq against any other person or propert y on account of such deb"t The general doctrine, as a rule of equit}', is not controverted on the part of the appellants, but is fully conceded. It is insisted, how- ever, by their counsel, that the guarantor in this instance did not become such at the request of the debtor ; that as to the debtor, he was a mere volunteer, having no remedy over against him, and never acquiring the character of a surety so as to be entitled to subrogation to the rights and remedies of the creditor. 1 The statement of the case is abridged, and only a portion of the opinion is given. — Ed. 446 .MATHEWS V. AIKIN. [CHAP. III. The objection seems somewhat narrow and technical when addressed to a court of equity whose peculiar province is to mete out substantial justice where the more restricted powers of the common law fail in its administration. But it leads us to examine carefully into the grounds and principles upon which the right of subrogation rests. Does it rest upon the foundation of a contract binding in a court of law between the debtor and his surety? In other words, does it turn substantially upon the question whether or not the surety who has paid the debt to the creditor lias a remedy over, on his contract, against the principal debtor for money paid in an action at law ? or does it not rest rather upon the broader and deeper founda tions of natural justice and moral obligation? Chancellor Kent says, in Hayes v. Ward 1 : "This doctrine does not belong merely to the civil law system. It is equally a well settled principle in the English law that a surety will be entitled to every remedy which the principal debtor has, to enforce eveiy security, and to stand in the place of the creditor, and have those securities trans- ferred to him, and to avail himself of those securities against the debtor. This right stands not upon contract, but upon the same principle of natural justice upon which one surety is entitled to contribution against another." Lord Brougham, in Hodgson v. Shaw, 2 said: "The rule here is undoubted, and is founded on the plainest principles of natural reason and justice, that the surety paying off a debt shall stand in the place of the creditor, and have all the rights which he has for the pur- pose of obtaining his reimbursement. It is scarcelj- possible to put this right of substitution too high ; and the right results more from equity than from contract or quasi contract unless in so far as the known equity may be supposed to be imported into any transaction, and so to raise a contract by implication." Sir Samuel Romilly, in his argument in Craythorne v. Swinburne, 3 stated the rule to be, that " a surety will be entitled to every remedy which the creditor has against the principal debtor to enforce every securit) 7 by all means of payment, to stand in the place of the creditor not only through the medium of contract but even by means of securities entered into without the knowledge of the snret} 7 , having a right to have those securities trans- ferred t o him, though there was no stipulation for that^~a nd to "avail himself of all those securitie s against the deb tor." And this exposition oi tne rule was lull)' sanctioned by Lord Eldon in giving judgment in that case. The equity is certainly as strong, and it seems to me somewhat stronger in favor of substitution, as against the creditor at least, than it is between sureties for contribution where one has paid the whole debt, and - it has been likened to the case of contribution between sureties. As between them the rule in equit}- is clear that the ground of relief does not stand upon any notion of mutual contract express or implied, but arises from principles of equity independent of contract. Story's Eq. § 493, and notes, where the authorities are all collected. l 4 John. Ch. 130. 2 3 Mylne & Keene, 183. 3 14 y es ]59 SECT. I.] MATHEWS V. AIKIN. 447 This is also substantially the rule in courts of law. 1 In that case the circumstances under which the defendant became co-surety were such as to repel the presumption of any promise to make contribution. But the court held that his being a surety on the same contract without qualification in terms was sufficient to fix his obligation to contribute, and that for the purposes of giving the plaintiffs a remedy the court would presume a promise. A promise was therefore imputed where none confessedly existed, in order to provide a remedy for the party where there was no doubt as to the legal liability ; and the legal liability in such cases springs from the equitable obligation ; the law courts having borrowed their jurisdiction in these particular cases from the courts of equity. In the present case it seems to me, if it were necessary, a court of equity ought to imply a promise on the part_of the creditor to subrogate th e surety to all his rights and remedies^ in c ase he resorted to the latter for payment of the debt upon his guarant y. The equitable obligation resting upon him to do so seems to me m ost manifest. I agTee fully with the learned judge who delivered the opinion of the \ I Supreme Court, that the right of the surety to demand of the creditor, whose debt he has paid, the securities he holds against the principal debtor and to stand in his shoes, does not depend at all upon any re- quest or contract on the part of the debtor with the surety, but grows ■rather out of the relations existing between the surety and the creditor, and is founded not upon any contract, express or implied, but springs from the most obvious principles of natural justice. And if it were true that the surety in such a case as this could maintain no action at law against his principal for the money paid, I agree with the Supreme Court that it would furnish a still stronger case for subrogation. A court of equity would never presume that the principal would interpose such a defence. If the creditor has insisted upon the surety's discharg- ing his obligations and liabilities as such, and fastened the character upon him by a judgment, he cannot, after receiving from him his debt, turn round and deny him the rights of a surety. The creditor must then fulfil his obligation to the surety, and leave the latter and his principal to adjust or litigate their rights or claims as they may see fit. There is no hardship in this. Decree affirmed. 2 1 Norton v. Coons, 3 Denio, 130. 2 Davis v. Schlemmer (Indiana, 1898), 50 N. E. R. 373; Bishop v. Rowe, 71 Me 263, Accord. — Ed. M ^48 PACE v. pace's ADMIIWSTKaTO V PACE v. Pi^E'^DMINIST ftp. in ^~7 MXNISTRATOR and Others. In the Supreme Court of Appeals, Virginia, April 7, 1898. [Reported in 95 Virginia Reports, 792.] Harrisox, J., 1 delivered the opinion of the court. The facts of this case in brief are that on April 7, 1893, one T. J. Talbott (under the name of Pace, Talbott, & Co.), John R. Pace, and James B. Pace, made a note for sixteen thousand dollars, payable to William F. Cheek, or order, one hundred and twenty days after date. T. J. Talbott was the principal in the note, and John R. Pace and James B. Pace co-sureties. T. J. Talbott died in the fall of 1894 en- tirely insolvent. Prior to his death, to wit: On October 9, 1893, John R. Pace died, leaving an estate not sufficient to pay more than fifty cents on the dollar of his debts. In May, 1894, this suit was brought to administer John R. Pace's estate, and a decree of reference was entered in July, 1894. On the 19th of September, 1895, being pressed by the executors of the creditor, William F. Cheek, James B. Pace took up the note in question by paying $16,551.57, the entire amount, principal and unpaid interest, to that time. Thereupon James B. Pace tendered proof of these facts to the commissioner in this suit, and claimed to rank in the distribution of John R. Pace's estate for the whole of the debt so paid by him until he had received one half of the amount paid by him, but the commissioner reported that he could only rank for one half the debt, and an exception made by James B. Pace on that ground was overruled by the court below, from which ruling this appeal was taken. The contention of the appellee is that J. B. Pace could not rank a gainst the estat e of his co -sure ty for the w hole debt when the c o-sure ty only owed him one half of the debt. I n other w ords, that appellant had no right to prove for the one half o f the deb t which h e himself was p ri- marily b ound to pay. The question presented is an important one in the administration of insolvent estates, and there is some conflict of opinion in respect thereto. We are, however, satisfied that the view taken by the learned counsel for the appellant is sustained by the best reason and the weight of authority. In Enders v. Brune, 2 Judge Carr, in discussing the doctrine of sub- stitution, says: " It has nothing of form, nothing of technicality about it ; and he who, in administering it, would stick in the letter, forgets the end of its creation, and perverts the spirit which gave it birth. It is the creature of equit}-, and real essential justice is its object." The doctrin e is well settled that the surety has the right of sub stitu- tion against the estate of his princi pal, where payme nt o f_a pref erred 1 Only a portion of the opinion of the court is given. — Ed 2 4 Rand, 447. SECT. I.] PACE V. PACE'S ADMINISTRATOR. 449 debt has bee n made by such surety after the death of th eprin cipal, and th e rule of sub stitut ion for the purpo se of enforcing contrib utio n amo ng co-sureties is not different . One surety who pays the common debt~ is ^p /) entitled to"be subrogated to all the rights and reme dies of the creditor. fr^y^zZj as against his co-sureties, in precisely the samemanner as against t he ^7 principal debtor. Robertson y. Trigg ; Dering v. P^arl of Winchelsea. 1 In Mx parte Stokes, 2 Stokes, the creditor, held a bond executed by a principal and three sureties. Two of the sureties, Clark and Phillips, became bankrupts, and Stokes, the creditor, proved against their es- tates. Thereafter the principal debtor compounded with his creditors ; and the other surety, Thomas Charles Ord, executed an assignment for the benefit of his. Stokes, the creditor, by dividends received from the principal debtor, from the estate of Clark, one of the sureties, and from Thomas Charles Ord, realized his whole debt, to the payment whereof the remaining surety, Phillips, contributed nothing. The creditor real- ized from the estate of Thomas Charles Ord 10s. in the pound, whereas the just proportion payable by each surety was only 4s. \Qd. in the pound. Thereupon the assignees of Thomas Charles Ord petitioned for leave to stand in the place of the creditor for his entire debt as against the estate of Phillips, which had paid nothing, so as to realize from that estate its just proportion, viz. : 4s. \0d. in the pound. The petition was allowed, Sir J. L. Knight Bruce saying : " The question then substantially is whether, as between the estates of the two sureties, when (one of them having become bankrupt) the creditor has proved the debt under the fiat, and has afterwards been paid in full, partly by the principal debtor and partly by the surety, not a bankrupt, — the latter has the right to use the proof for the pur- pose of obtaining from the bankrupt's estate that amount of contribu- tion to which the bankrupt is, or but for the bankruptcy would have been, liable, so far as the proof can furnish means for that end ; and 1 think that he has. " Where several persons are liable, each in solido, to a debt, the creditor may enforce payment in a manner which, as between the debt- ors themselves, is unjust. This must sometimes happen ; but in such cases is it not the function and the duty of a court of justice, at least of a court of equity, to place them in the same situation between them- selves as if the creditor had enforced his rights against them in a man- ner conformable to their rights against each other, so far as it can be done? Generally speaking, the law of this country, as I apprehend, answers that question in the affirmative. " Now, in the present case, had Mr. Stokes regulated his proceeding in such a manner, a portion of what he has received from Mr. Thomas Charles Orel's estate would have been taken by Mr. Stokes from Mr. Phillips' estate, if available, for the purpose. The mere circumstance that it has not until the present time become practically available for the purpose, is, I conceive, nothing." 1 32 Gratt. 76. 8 De Gex, 618. 29 450 PACE v. pace's administrator. [chap. III. In the case of Morgan v. Hill, 1 a debt was owing by a principal debtor and five sureties. Nothing could be realized from the principal debtor, or from one of the sureties, and only a very insignificant sum from another of the sureties. So three of the sureties were left to bear the liability. One of these three made an assignment, which, after the payment of specified prior claims, provided .for the payment of his remaining debts ratably. The creditor presented his claim for payment to the trustees in the assignment, but before the trustees paid anything thereon, the debt was paid by the other two sureties, who subsequently also took from the creditor an assignment of his debt and securities. These two sureties then claimed the right to receive a dividend from the assigned estate of their co-surety on the whole amount of the debt paid by them, until the} - had received one third thereof, that being the just proportion payable by each surety. And this claim was allowed by Kekewich, J., and on appeal his order was affirmed. Kekewich, J., who decided the case in the lower court, said : k ' Two out of three sureties paid the whole debt, and having so done, they are entitled to stand in the shoes of the creditor whose whole debt they have paid. That would seem to be according to natural justice ; but whether it be so or not, at all events it is strictly in accordance with the provisions of the Mercantile Law Amendment Act, 1856 (19 and 20 Vict. c. 97). " A surety in such case is to stand in the place of the creditor, ana to use all the remedies, and if need be, and upon a proper indemnity, to use the name of the creditor in any action to obtain indemnification.'' The reference of the learned judge to the " Mercantile Law Amend- ment Act " as justifying his conclusion, if not justified by its conformity to " natural justice," is a circumstance that does not detract from the weight of this case as an authoritv in this State, because that act was passed to do away with the doctrine laid down in Copis v. Middleton, which was disapproved by this court in Powell v. White,' 2 in a learned opinion b} T Judge Tucker, and the act referred to simply declared the law in England to be what it had theretofore been under our decisions. In TTejss^s_Estate, 3 t he precis e question involved here was presented, and the Sup rem e Court of Pen nsyl vania held that th e suret} T paying the debt, after th e de ath of his co-sur ety, was entitled to pr ove aga inst his estate for the entir e amount of the debt. There are man}' cases holding that where a creditor of an insolvent person who is dead, or has made an assignment for the general benefit of creditors, holds collateral security for his debt, and after the death, or the assignment, of his debtor, realizes on the collaterals, he may, notwithstanding, prove against the decedent's estate, or the assigned estate, for the full amount of his debt as it stood at the time of his death, or assignment. The grounds upon which these cases proceed l '94, 3 Ch. 400. 2 1 1 Leigh, 309. 8 69 Penn. St. 272. SECT. I.] PACE V. PACE'S ADMINISTRATOR. 451 are ably set forth in the opinion of Judge Taft in Chemical National Bank v. Armstrong, 1 in which he reviews all the authorities. The only case involving the question here presented, cited by appel- lee, is that of New Bedford Institution for Savings v. Hathaway. 2 In this case the holder of a note, by an arrangement with a solvent surety thereon, proved the note against the insolvent estate of another surety, and then assigned the note with his claim against the estate to the sol- vent surety, who paid the holder in full. The court held that this amounted to a payment of the note, ordered the proof to be expunged, and only allowed the surety to prove one half of the claim. In this conclusion we cannot concur. There are three authorities cited in its support which are not in our judgment entitled to the weight given them. The one chiefly relied on is Maxwell v. Heron, a Scotch case which, if applicable, has been overruled in England, and the law there settled, as we have seen, to the contrary. It further appears that the decisions of the Massachusetts court, upon analogous questions, have not been in accord with the views of this and other courts upon like questions. An impor tant, if not vital, objection to the Massachusetts view of t his question is that the rights of the surety, instead of being fixed an d certain, are made to d epend upon accident, or upon the caprice of the creditor . It encourages a policy of obstruction in the administration of estates, for if those interested in the insolvent estate can delay its settlement until the creditor demands his debt from the solvent surety, they reap the advantage by having a smaller debt to share with them in its distribution. On the other hand, temptation is held out for a cor- responding effort on the part of the solvent surety to avoid paying until the creditor has received such dividends as the insolvent estate will pay, because the amount for which he is liable is thereby reduced. It gives opportunity to the creditor by collusion or otherwise to further the interest of one surety at the expense of the just and equal rights of the co-suret}'. Results like these, which depend, not upon the rights of the partie s fixed by la w, but upon the superior skill of one ov er the other in m a- noeuvrin g for position, or upon tne will and caprice of the credito r, or upon mere accident, cannot be founded upon sound principle s. In Watts v. Kinney, 3 Judge Tucker, speaking for this court, says that the surety, in paying the debt, "is governed by the law of this court. Even on entering into his engagement as surety, he looks to its well established principles. He knows if he pays the debt to the obligee he will stand in the obligee's shoes. He knows he will be sub- rogated to all the rights of the obligee, as they subsist at the time he makes his payment. He knows that a court of equity looks not to form, but to substance ; that it looks to the debt which is to be paid, not to the hand which may happen to hold it ; that the fund charged with its paj'ment shall be so applied, whosoever may be the person en- l 59 Fed. 380 ; 8 C. C. Ap. 163. « 134 Mass. 69. 3 3 Leigh, 272. 452 PACE v. pace's administrator. [chap. in. titled ; and that it considers a debt as never discharged, until it is dis- charged by payment to the proper person, and by the proper person. He knows that that court which permits no act of a trustee to prejudice the cestui que trust will not permit one who stands in the relation of the creditor or obligee to the surety, to bar him of those rights which the principles of equity have secured to him. He is conscious that his rights do not depend upon the caprice of the creditor, or the whim of an executor, or the sense of right of other creditors, but rest upon the immutable principles of justice and equity ; and, in making his pay- ment, he does it in the confidence that he will be entitled to be indem- nified to the full amount to which his creditor could have charged the assets of the principal." These considerations bring us, in the case at bar, to the conclusion that John R. Pace's estate and James B. Pace were each bound in solido to their common creditor, William F. Cheek, for the entire amount of the debt in question ; that at the death of John R. Pace the rights of his creditors became fixed, the assets of the estate passing, as a trust fund, into the hands of his representatives charged with the payment of his debts ; that, subject to costs of administration and pre- ferred debts, William F. Cheek then became entitled to an interest in said estate, not then ascertained, but capable of being made certain, bearing such proportion to the entire assets as his debt bore to the entire indebtedness. That when James B. Pace, thesu rety, . paid t his debt he became at on ce subrogated to all the rights, remedies , .and means 01 paymen t in respect thereto that were possessed bythe cre di- t or, and had the righ t to prove, as the creditor could h ave done, th e entire debt ag ainst the es tate of his co-surety, John" R. P ace, and to receive dividends u pon the basis of the entire debt, until reimbu rsed t hat half of the common burden belonging to the co-surety. This con- clusion works no injustice to the other creditors of John R. Pace ; their rights, which became fixed at the death of the debtor, remain unim- paired. They had no interest in that proportion of the assets belong- ing to William F. Cheek. That interest was as distinct and separate from theirs as if it had been already segregated and set apart for the benefit of AVilliam F. Cheek. They could not add to, or take from it, while it was the property of Cheek, nor can they do so now that it stands, in equity, as indemnity for the surety who has paid it. For these reasons the decree appealed from must be reversed, and the cause remanded to be proceeded with in accordance with the views expressed in this opinion. Reversed. 1 i Ex parte Stokes, De Gex, 618 ; In re Parker, '94, 3 Ch. 400; Hess v. Hess, 69 Pa. Record Maxwell v. Herron, 3 Ross L. C. 129, 3 Paton, 350; Apperson v. Wilboum, 58 Miss. 439 (semble); New Bedford Institution v. Hathaway, 134 Mass. 69, Contra. In 4 Va. L. Reg. 302, the decision in Pace v, Pace is ably vindicated against an adverse criticism in 4 Va. L. Reg. 298. I n jurisdic tioi t , where pay ment by a surety reduc es t he amount pr ov able against a co-surety, the rule may be evaded by an ingenious But simple device. The surety, in - SECT. I.] DUNCAN ET AL. V. NORTH AND SOUTH WALES BANK. 453 DUNCAN, FOX, & CO., and Others, Appellants, v. NORTH AND SOUTH WALP:S BANK and Others, Respondents. In the House of Lords, November 27, 1880. [Reported in 6 Appeal Cases, 1.] The two firms of the appellants carried on business at Liverpool as merchants. They were not connected together in business, but the transactions of both with the Radfords were exactly of the same kind. It will be sufficient to refer to one alone. Radford & Sons were millers and corndealers at Liverpool, the firm consisting really of Samuel Collins Radford and James Radford. The Radfords were not strictly the customers of the North and South Wales Bank, but had opened a discount account with it, and were in- debted to it in respect of discounts of bills of exchange. This dis- count account was considerable. On the 1st of December, 1874, Samuel Collins Radford deposited with the bank certain deeds of freehold property belonging to himself, for the purpose of securing payment of the amount then due, and to become due, on discounts, from his firm to the bank. The deposit was effected by two memorandums, one of which, executed by Mr. S. Col- lins Radford alone, stated that the deposit was made " in pledge to secure to the said bank the balance, for the time being, owing to the said bank by my firm of Samuel Radford & Sons for discounts and advances, and for all other moneys in or for which the said firm, whether alone, or jointh' with any other person or persons, were or might, from time to time thereafter, be or become indebted or liable on their account, or which the said bank might at any time claim against the said firm." The second memorandum relating to other property of S. C. Radford was in a similar form. In November, 1875, Duncan & Co., through their brokers, Maxwell & Co., sold to S. C. Radford & Co. a cargo of wheat ex Rima for stead of payipg the creditor outright, has only to deposit the money with the credit or, to be carried to a suspense account, with power to the creditor to appropriate the ac- c punt whenever he sees li t! Then the creditor, not having been paid by the surety, will prove agai nst the co-surety for the full amount, receive his dividend, take out of die suspens e account enough to g ive him 100 per ce nt, and surrend er the resF ot tile s uspense account to the su rely. CommercialBank v. Official Assignee, '9.3, A. C. 181. A partner who has paid all the firm debts is entitled to contribution from his co- partners, for their share of the deficiency after the exhaustion of the firm assets. In accordance witli the doctrine of the princi pal case, he should be allowed to prove in the bankruptcy of a co-partner, by subr ogation, for the full amount of the defi ciency, r ecovering, However, only the due p roportio n of the bankrupt partn er. 5 Harv. L. Rev. 40B, li> lb. 284. See also St. 19 &20 Vict. c. 97, § 5, given supra, 382. But t he solvent pay ing partner seems th us far to have underestima ted his rights, and to have p roved on ly t or this due pr oportion! Ex parte Moore, 2 Gl. & J. 166, 172; Ex parte Plowden, 2 Dea. 456, 3 Mont.TTA. 402 ; In re Dell, 5 Sawy. 354, Ames Cas. on Park 419 s. c. — Ed. 454 DUNCAN ET AL. V. NORTH AND SOUTH WALES BANK. [CHAP. III. cash after deliver} 7 . Part of the price was paid in cash, but James Radford applied to Mr. Duncan to take the acceptances of Radford & Sons for the residue. Duncan at first declined to do so, on which James Radford said, ' ' You bank with the North and South Wales Bank, if you go there you will find it will be all right with our bills," to which Duncan answered, " If the bank will accept those bills with- out our indorsement, then I can oblige you." Mr. Duncan went to the bank and saw the manager, who declined to discount the bills without the indorsement of Duncan & Co., stating that it was contrary to all banking customs to discount bills for an}' one who did not indorse them ; he added that he did not think that Duncan & Co. would incur more than a mere nominal responsibility by making the indorsement, or something to that effect. Mr. Duncan thereon informed Radford that he would consent to take the bills, which he did, and then indorsed them and handed them to the bankers, who discounted them, placing the amount to the credit of Duncan & Co. At that time Duncan & Co. had no knowledge that the bankers held any securities from Radford. In January, 1876, before an}' of the bills became due, Radford & Sons stopped payment. When the bills became due they were presented for payment; they were dishonored, and Duncan & Co. became liable to the bankers for the amounts. They received formal notice of the dis- honor, and a demand of payment. There were other bills of Radford & Co. held by the bankers under similar circumstances on which Rob- inson & Co. were indorsers, all of which became due between the 22d of February and the 27th of March. On the 24th of February, 1876, Radford & Co. executed a deed of inspectorship. The bankers made the property deposited with them available for the purpose of covering their claims, and if the bills in question were not included in the gen- eral balance, that balance would be satisfied, but if they were included in it, the bankers would still be creditors of Radford & Co. upon the bills. Messrs. Duncan & Fox admitted their liability on the bills ; but (having in the meantime heard of the securities held by the bankers) contended that they were entitled, in calculating the amount due upon the bills, to the benefit of these securities, for that they, Duncan & Fox, being merely as between themselves and the bankers, sureties on the bills, they were entitled to the indemnity afforded by the securities which the principals on the bills, Radford & Co., had placed in the hands of the bankers. The appellants, after coming to a knowledge that the bankers held securities to cover discount and balances, applied to them to realize these securities and apply the proceeds in payment of the amounts due on the bills, or to render to the appellants an account of what was due from Radford & Sons, and, on payment of the same by the appellants, to transfer to them the securities for the same amount remaining in their hands. Balfour, Williamson, & Co., and the other unsecured creditors, claimed to have the securities paid over to the inspectors for general distribution under the deed. The bankers declined of them- selves to adopt either claim, and required the direction of a Court. SECT. I.] DUNCAN ET AL. V. NORTH AND SOUTH WALES BANK. 455 An action was thereupon brought by Duncan & Co. in the Chancery Court of the Count}- Palatine of Lancaster, to determine this question. Messrs. Balfour, Williamson, & Co., creditors of the Radfords, were joined as defendants representing the creditors in general. The Vice- Chancellor (Mr. Little), on the 10th of May, 1878, decided in favor of the claim made by Duncan & Co. The decree, dated the 28th of May, 1878, declared that the appellants were sureties for the payment by the Radfords of the balance due in respect of the bills held by the bankers, and that the equitable mortgages of the 1st of December, 1874, extended to such bills of exchange and to all other acceptances of the Radfords held by the bankers, whether discounted by the Rad- fords or for third parties, and relief was given to Duncan & Co. upon the principle that the}' were entitled to the benefit of the securities so deposited with the bankers. On appeal, this decree was ordered to be reversed and the action dismissed with costs. 1 This appeal was then brought. 2 The Lord Chancellor (Lord Selborne) : My Lords, the appellants, Duncan, Fox & Co., are liable, as indorsers of three bills of exchange, dated the 25th of November, 1875, drawn upon and accepted by a firm of Samuel Radford & Sons, for the total amount of £8,920 15s. 3c?., and given to Duncan, Fox & Co., in part payment for wheat sold by them to Samuel Radford & Sons. The other appellants, Jonathan Robinson & Co., are liable as drawers and indorsers of two other bills, also drawn upon and accepted by Samuel Radford & Sons, under dates the 19th of November and the 14th of December, 1875, for the total amount of £5,432 7s. 6c?., on account of other wheat sold to Samuel Radford & Sons. All these bills were discounted, in the usual course of business, with the North and South Wales Lank, without any special agreement ; and the bank has never parted with and still holds them. Samuel Radford & Sons stopped payment in January, 1876, and on the 24th of February following executed a deed of inspectorship, under which their joint and separate estates are applicable for the benefit of their credi- tors, parties thereto, who are represented by the respondents. Neither the appellants nor the bankers are parties to that deed. The first of the five bills in question became due on the 22d of February, three others on the 28th of February, and the last on the 17th of March, 1876. They were all duly presented for payment, and dishonored, and notice was duly given of dishonor. Some payments have been made by the acceptors on account; and the amount now remaining due upon them is claimed by the bank, as to three from Duncan, Fox & Co., and, as to two, from the other appellants. The appellants are read}' and willing to meet their liabilities on these bills, but they insist that a sum of £5,921 19s. 6(7. now in the hands of the bank, which has been re- alized from securities held by the bank under a certain memorandum i n Ch. T>. 88. 2 The arguments of counsel and the concurring opinion of Lord Watson are omitted. — Ed. 456 DUNCAN ET AL. V. NORTH AND SOUTH WALES BANK. [CHAP. IIL of deposit, dated the 1st of December, 1874, ought to be applied to re- lieve them as far as it will extend, and also that the securities yet remaining unrealized under the same memorandum (valued at about £2,000), ought to be handed over to them, on payment of the balance which, after the application of the £5,921 19s. 6c?., will remain due upon the bills. This claim is resisted by the respondents, who, for this pur- pose, may be regarded as standing in the shoes of Samuel Collins Rad- ford, one of the partners in the firm of Samuel Radford & Sons. The deposit consisted of the title deeds of certain real estate at Liverpool, belonging absolutely to Samuel Collins Radford, which, by the memorandum of the 1st of December, 1874, were pledged to secure to the bank (whose customers Samuel Radford & Sons were), "the balance for the time being owing to the said bank bj' Samuel Radford & Sons for discounts and advances, and for all other moneys in or for which the said firm, whether alone or jointly with any other person or persons, were or might, from time to time thereafter, be or become in- debted or liable on their account, or which the said bank might at any- time claim against the said firm." At the time when the present ques- tion arose all dealings and accounts between the bank and Samuel Radford & Sons had been closed, and nothing remained due to the bank, under the memorandum of deposit, except the balance then un- paid upon those bills. The property from which the sum of £5,921 19s. 6d. was realized was sold by the bank after the commencement of the action. The bank is before the Court (subject of its right to receive payment of the balance due on the bills and of its costs) me re by as a stakeholder. In its answer it professes to be " desirous of acting with entire impartiality, and holding an even hand between the plaintiffs and the defendants, and of dealing with the securities and the proceeds thereof under the direction of the Court ; " and it offers, on receiving paj'ment of what is due to it, to pa)' over any surplus, and to assign any property comprised in its security which may remain unsold, to such persons as the Court may consider entitled. The question, therefore, as to the proper appropriation of the £5,921 19s. 6d. and the remaining securities, is between the respondents, claim- ing in right of Samuel Collins Radford (one of the acceptors), and the appellants, the indorsers of the bills of exchange ; and it ought, I con- ceive, to be determined upon the same principles as if the appellants had actually paid the bills, and as if the bank had paid the proceeds of the securities either to the appellants or into Court in this action. If, in either of those events, Samuel Collins Radford would have been entitled to an order against the appellants for repayment, or for pay- ment out of Court of such proceeds, to be applied as part of his estate under the inspectorship deed, your Lordships' judgment ought now to be for the respondents ; if not, the appellants are right. The Vice- Chancellor of the Palatine Court of Lancaster thought that the appel- lants were right; and, with the utmost respect to the Court of AppeaJ (which thought otherwise), I am of the same opinion. BECT. I.] DUNCAN ET AL. V. NORTH AND SOUTH WALES BANK. 457 In examining the principles and authorities applicable to this ques- tion, it seems to me to be important to distinguish between three kinds of cases : (1) Those in which there is an agreement to constitute, for a particular purpose, the relation of principal aud surety, to which agreement the creditor thereby secured is a party ; (2) Those in which there is a similar agreement between the principal and surety only, to which the creditor is a stranger j and (3) Those in which, without any such contract of suretyship, there is a primary and a secondary lia- bility of two persons for one and the same debt, the debt being, as between the two, that of one of those persons only and not equally of both, so that the other, if he should be compelled to pay it, would be entitled to reimbursement from the person by whom (as between the two) it ought to have been paid. It is, I conceive, to the first of these classes of cases, and to that class only, that the doctrines laid down in such authorities as Owen v. Homan, 1 Newton v. Chorlton, 2 and Pearl v. Deacon, apply in their full extent. If, so far as the creditor is concerned, there is no con- tract for suretyship, if the person who has (in fact) made himself answerable for another man's debt is, towards the creditor, no surety, but a principal, then I think that the creditor would not be subject to those special obligations which were described by Lord Truro in Owen v. Homan, 1 and would not, generally, have his powers of dealing with securities circumscribed and restricted in the manner described by Vice-Chancellor Wood in Newton v. Chorlton, 2 and by Lord Romilly and the Lords Justices in Pearl v. Deacon. If, for example, in Pearl v. Deacon the contract of suretyship had been only between Pearl and Pearson inter se, Messrs. Deacon dealing with them both as principals, and not with Pearl as a surety, I should take it to be clear that Messrs. Deacon might have distrained upon goods comprised in their security for the rent due to them from Pearson, without losing (as they did in the actual case) their remedy against Pearl. The difficulties, there- fore, which in the present case appear to have weighed most upon the minds of the judges in the Court of Appeal, would not ordinarily arise, unless there was a contract of suretyship properly so-called, not between the two debtors only but between them and the creditor also. It is, however, consistent with this that the person who, as between himself and another debtor, is in fact a surety (though the creditor is no party to that contract of suretyship), has, against that other debtor, the rights of a surety ; and that the creditor, receiving notice of his claim to those rights, will not be at liberty to do anything to their prejudice, or to refuse (when all his own just claims are satisfied) to give effect to them. The judgment of Lord Justice Turner, in Davies v. Stainbank, 3 and the cases of Ex, parte Hippins & Harrison, 4 and Liquidators of Overend, Gurney, & Co. v. Liquidators of Oriental Financial Corporation, 6 are founded, as I understand them, on this l 3 Mac. & G. 378. ' " 10 Hare, 646. E 6 D. M. & G. 694. 4 2 Glyn & Jameson, 93. 5 Law Rep. 7 H. L. 348. 458 DUNCAN ET AL. V. NORTH AND SOUTH WALES BANK. [CHAP. IIL view of the law. In such cases the equity is direct in favor of the Suret3*-debtor against the principal debtor ; but it affects the creditor towards whom they are both principals onlj r as a man who has notice of the obligations of one of his own debtors towards the other. As between the two debtors, the " established principles of a Court of Equity," to which Sir Samuel Rom illy referred in his argument in Craythorne v. Swinburne, judicially approved by Lord Eldon, are fully applicable. "Natural justice" (it was there argued) "requires that the surety shall not have the whole thrown upon him, by the choice of the creditor not to resort to remedies in his power." In Aldrich v. Cooper, 1 Lord Eldon speaks of a suret3*'s equity as resting upon the same principles with that of marshalling, when one creditor of the same debtor is able to resort to either of two funds, and another creditor to only one. " It is not" (he sa3 T s) " by force of the contract, but that equity, upon which it is considered against conscience that the holder of the securities should use them to the prejudice of the surety ; and therefore there is nothing hard in the act of the Court placing the suret}' exactly in the situation of the creditor." And soon afterwards (where he speaks of marshalling), "The principle, in some degree, is that it shall not depend upon the will of one creditor to disappoint another; " and, "The Court has said that if a creditor has two funds, the interest of the debtor shall not be regarded, but the creditor having two funds shall take to that which, paying him, will leave another fund for another creditor." And in Younge v. Reynell, 2 Vice-Chancellor Turner said : " When Lord Eldon says it is against conscience to sue the suret}', it must be considered what is the meaning of that expres- sion, and why this Court considers it against conscience that the surety should be sued ; and I take it to be because, as between the principal and suret}', the principal is under an obligation to indemnify the surety ; and it is, I conceive, from this obligation that the right of the surety to the benefit of the securities held by the creditor is derived. The prin- ciple is not, I think, much dissimilar to that which applies where a man directs part of his estate to be employed in carrying on a trade, in which case the creditors of the trade have a right to resort to that part of the estate, because the trustees have a right to be indemnified out of it." It appears to me that these principles of equity are not less applic- able to cases of the third class, — cases in which there is, strictly speak- ing, no contract of suretyship, but in which there is a primary and secondaiy liability of two persons for one and the same debt, hy virtue of which, if it is paid by the person who is not primarily liable, he has a right to reimbursement or indemnity from the other, — than to those of the second class, in which there is a contract of suretyship to which the creditor is not a part}'. To this third class of cases, the rights of an indorser against an acceptor of a bill of exchange may most properly be referred. The liability of the indorser to the holder is, by the law 1 8 Ves. 382, 389. 2 9 Hare, 819. SECT. I.] DUNCAN ET AL. V. NORTH AND SOUTH WALES BANK. 459 merchant, conditional, and (as was said by Mr. Justice Buller, in Tindal v. Brown 1 ) "only secondary;" but, when the conditions required by that law are fulfilled, it becomes absolute, and is that of a principal ; and the indorser's right, if he pays the holder, to recover over against the acceptor is not founded on any agreement between him and the acceptor (who is as likely as not to be a stranger without any com- munication with him before the indorsement), but is established by the same law. But contracts of this kind, as well as suretyships proper, are entered into, by all the parties to them, with a knowledge and in view of the law by which the}' are governed. The acceptor, though he may know nothing of any particular indorser, knows that by his accept- ance he does an act which will make him liable to indemnify any person who may indorse, and may afterwards pay the bills ; and he knowingly and intentionally undertakes that liability, as much as if the indorse- ment were the result of direct communication between himself and that person. Lord Eldon, in ex parte Younge, 2 said with his usual accuracy (his language being as applicable to an indorser as to a drawer) : " The drawer of a bill of exchange is not strictly a suret}^ for the acceptor. In general cases, the acceptor is primarily liable upon the bill, and the drawer may be in the nature of a surety." The statement in Smith's Mercantile Law (3d edition, p. 253) is also correct, and is established b}' many authorities, that "in the contract by bill or note, the maker or acceptor is considered the principal, and the indorsers as his sure- ties ; and consequently, if the holder either discharge or suspend his remedy against the former, the latter, unless the}' have previously con- sented to it, or afterwards promised to pay with knowledge of it, are all immediately discharged." Mr. Smith uses, in this passage, the language of Mr. Justice Chambre in Clark v. Devlin, 3 who stated that the case of Darley v. English was decided b} r Lord Eldon (in the Common Pleas) on that principle. I am unable to conceive an}' ground on which the principle which prevails in cases of suretyship should go so far as this, in favor of the drawer or the indorser, and not also extend (when the indorser is compelled to pay the bill, and when the question arises be- tween him and the acceptor only) to securities deposited by the acceptor with the holder. In the present case the holder has actually in his hands a large sum of money, realized by him from such securi- ties. It is very difficult, on any rational principle, to distinguish the receipt of such a sum, under such circumstances, from an actual pay- ment on account by the acceptor. Of the creditor's right, if he pleases, to apply it in payment of the bills there can be no possible question ; yet it is contended that he may, at his option, give the money back to the acceptor, and sue the indorser on the bills ; na}', more, that if he does compel the indorser to pay the bills, without applying that money to them, a court of equity is bound to leave the burden on the indorser, and restore to an insolvent acceptor the money which has been so re- 1 1T.K. 170 ; affirmed 2 T. R. 186. 4 3 V. & B. 40. 3 3 b. & P. 366. 460 DUNCAN ET AL. V. NOKTH AND SOUTH WALES BANK. [CHAP. III. alized from the securities. I cannot reconcile such a decision with the doctrines of Lord Eldon and Lord Justice Turner. No case before the present has been cited, in which the right of a drawer or indorser to the benefit of such securities, as between himself and the acceptor, has ever been denied or doubted. The opinion of Sir John Byles, in his very learned Treatise on Bills, is (no doubt) no authority ; and I will not lay stress upon the case of Praed v. Gardiner, 1 because, as was ob- served by Mr. Marten, what was really done in that case was to marshal securities held by the creditor according to the equities of the different persons entitled to redeem them, and the exact grounds of the judgment do not appear. But I think that the principles deducible from all the authorities lead, necessarily, to the conclusion that, under circumstances like the present, the equity between the indorser and the acceptor is the same as that between a surety and a principal debtor when the creditor is not a party to the contract of suret3'ship. That equity, according to my view of it, need not interfere with the ordinary operation of such a general covering security as that given by Samuel Collins Radford to the North and South Wales Bank, during the continuance of the deal- ings between the secured creditor and the acceptor of bills not overdue, which the creditor may hold or part with as he pleases. It will not in- capacitate bankers who ma}' hold such a bill, accepted by a customer and indorsed by a third party, from carrying on their dealings with that customer, by varying the securities received from him according to the ordinary course of those dealings, as long as he remains solvent and before the acceptance has been dishonored. It will not, in my opinion, tend to paralyze the business of discounting bills of exchange. But it is an equity which, in mj' judgment, does certainly attach, when the bills, overdue and dishonored, and the securities, are found together in the hands of the secured creditor, at the time when he requires pay- ment from the indorser ; when the creditor has no other transactions then depending with the customer, and no claim upon the securities ex- cept for the bills themselves. And when the competition is between the indorser and the acceptor onby. For these reasons, I think that the judgment under appeal is errone- ous, unless it can be suppoi'ted on the ground that the security in this case was given by one only of the partners in the firm by which the bills were accepted. But it appears to me that it can make no differ- ence whether the security was given by all the acceptors or by one of them. In each case alike the person giving the security is principal debtor as between the indorser and himself; and the interest, whether of a sole debtor or of one of two or more joint debtors, is not (in my opinion) to be regarded in competition with the equity of an}- one who is in the nature of a surety for him, and whom he is bound to indemnify. I therefore propose to your Lordships to reverse the decree appealed from, and to restore that ol the Vice-Chancellor of the County Palatine 1 2 Cox, 86. FECT. I.] DUNCAN ET AL. V. NORTH AND SOUTH WALES BANK. 461 of Lancaster. The bankers will take their*costs here and below out of the fund arising from the securities ; and the appellants must have their costs here and below out of an}' surplus remaining from the secu- rities in the first instance, and (so far as the securities may not be sufficient to pay them) from the respondents. Lord Blackburn. My Lords, the North and South Wales Bank had, amongst its customers, a firm of Samuel Radford & Sons. The bank had taken from Samuel Collins Radford, one of the partners in that firm, the title deeds of some property belonging to him with two mem- orandums, by which he acknowledged to have delivered the title deeds in pledge to secure to the bank whatever might be owing from the firm to the bank. I do not think it either necessary or desirable to inquire what might have been the rights of the various parties under all the complicated state of things which might have arisen during the winding up of the transactions between the bank and Samuel Radford & Sons. It is enough to consider the state of facts which has in this case actually occurred. The bank had discounted for one of the appellants two bills of ex- change, and for the other appellant three bills of exchange accepted by the firm of Samuel Radford & Sons, payable at a bank in London. These bills were indorsed by the appellants respectively. At maturity they were dishonored, and the firm was consequently liable to the bankers as holders of them, so that the equitable mortgage was held in pledge to the bank to cover, amongst other things, those bills. The bank gave due notice of dishonor to the several indorsers respectively, and they became bound to pay to the bankers, as holders, the amount of the bills, on having the bills delivered to them so as to remit them to their former rights as holders against the acceptors and an}' indorsers prior to themselves. The estate pledged to the bank has, in fact, been converted into money, and partly from that source, and parti}' from others, most of the liabilities of Samuel Radford & Sons to the bank have been dis- charged in full, and some payments have been made by the acceptors on account of the bills in question. And now it is ascertained that after all liabilities of the partners to the bank, except those on the five bills in question, have been discharged, there will remain on the equitable mortgage, partly realized, a considerable surplus, though not sufficient to pay the bills in full. The indorsers offer to pay the bills on having credit for the money realized, so far as not applicable to other purposes, and having the equitable mortgage transferred to them. Samuel Col- lins Radford has not become bankrupt, but the general creditors of the firm insist that the indorsers of the bills ought to be made to pa}' in full, and then that the surplus of the pledged estate should be delivered to Samuel C. Radford to be applied for the general benefit. The ap- pellants have filed this bill to have the memorandums and the title deeds, together with the bills of exchange, delivered to them, on pay- 462 DUNCAN ET AL. V. NORTH AND SOUTH WALES BANK. [CHAT. III. ment by them of what remains due to the bank on the bills. The bank is sure to be paid in full either wa}', and having no interest in the matter, does not wish to favor either party, and submits to deal with the bills of exchange and equitable mortgages, after satisfaction of the principal moneys, interest, and costs, as the court may direct. The Vice-Chancellor held that the appellants were entitled to what they claim. The Lords Justices reversed his decision, and the sub- stantial question before the house is, whether the indorsers of the bills have such a right. I think it is clear that they have no such right by contract. They did not at the time when they got the bills discounted at the bankers so much as know that the bank held an}' security from Samuel Radford & Sons, and of course, that being the case, made no express stipulation about it ; and there is nothing in the nature of an indorsement for value to give the indorser any right, during the currency of the bill, to any securit}' which either his immediate indorsee, or any other holder of the bill, may have from any party to the bill. The indorser, by the law merchant, is liable, on having due notice of dishonor, to pay the amount of the bill to the holder for the time being, on having the bill restored to him ; but till the bill is dishonored there is nothing to prevent the party who may be the holder for the time being indorsing it, even with- out recourse, so as to make it impossible that he can ever be the per- son to whom the prior indorser will have to pay the bill. I think, therefore, with the Lords Justices, that there is neither principle nor authority for saying that the indorsers are, during the currency of the bill, sureties, or in the nature of sureties to the indorsee, or that they have an}' equit}' to prevent the indorsee from dealing as it may seem to him most desirable, with any other parties unless thereb} r he prevent? himself from giving notice of dishonor, so as to give them their rernedj against prior parties to the bill ; and I agree with them in thinking that any contrary decision would be very mischievous. But though the indorsers had no such right by contract, yet after the bills were dishonored and notice of dishonor had been given to the in- dorsers, the position of the parties is altered. Though the indorser is primarily liable as principal on the bill, and is not strictly a surety for the acceptor, he has this in common with a surety for the acceptor, that he is entitled to the benefit of all payments made b}' the acceptor, and is entitled, on paying the holder, to be put in a situation to have a right to sue the acceptor. And now the state of affairs is so far cleared up, that the bank had, besides the right to come upon the indorsers, a right to come upon the security pledged to the bank b}' Samuel Collins Radford. I think it is established by the case of Deering v. Lord Winchelsea, and the observations on that case by Lord Eldon in Craythorne v. Swinburne, and Lord Redesdale in Stirling v. Forrester, 1 that where a creditor has a right to come upon more than one person or fund for 1 3 Bli. 575. SECT. I.] DUNCAN ET AL. V. NORTH AND SOUTH WALES BANK. 463 the pa} T ment of a debt, there is an equity between the persons inter* ested in the different funds that each shall bear no more than its due proportion. This is quite independent of any contract between the parties thus liable. Lord Eldon, in Craythorne v. Swinburne, says of Deering v. Lord Winchelsea: " That case also established that though one person becomes a suret}* without the knowledge of another surety, that circumstance introduces no distinction." And Lord Redesdale, in Stirling v. Forrester, 1 says : " The principle established in the case of Deering v. Lord "Winchelsea is universal, that the right and dut} r of contribution is founded upon doctrines of equity, it does not depend upon contract. If several persons are indebted, and one makes the payment, the creditor is bound in conscience (if not bj' contract) to give to the party paying the debt all his remedies against the other debtors. . . . He (the creditor) is bound, seldom by contract but always in conscience, as far as he is able, to put the party paying the debt upon the same footing as with those who are equally bound. That was the principle of decision in Deering v. Lord Winchelsea, and in that case there was no evidence of contract." And this last principle, that the person making payment of more than his due proportion is entitled to have assigned to him all rights and securities of the creditor for the purpose of, by means thereof, obtaining contribution, is recognized and enacted b} r the 19 & 20 Vict. c. 97, s. 5. I think that though the indorser of the bill is not exactby a surety for the acceptor, or a co-surety with those who are sureties for the accep- tor, yet he stands in a position sufficiently analogous to that of a surety to bring him within the principle of Deering v. Lord Winchelsea. If this be correct, it seems to me that the question in the present case is reduced to this: what are the due proportions as between the indorsers and the security created by one of the acceptors on his separ- ate estate? If a third person, not a member of the firm or liable for its engagements, had become surety or pledged his estate as security to the bank for the general balance due to it from the firm, it might be con- tended, at least plausibly, that he became onty surety for the balance after all indorsers had paid, and was therefore entitled to say that, as between him and the indorser, the indorser should pay all before the surety paid anything. I do not express any opinion how that would be. But the owner of the pledged estate in this case was himself one of the firm and an acceptor of the bill, and as such liable to the indorser. And if the bank had applied the whole of the proceeds of the security, as far as the}' went, to the payment of these bills, it seems quite clear that Samuel Collins Radford could not have come on the indorsers to repay him part of the debt which he had thus paid. The answer would have been that he was, as between him and the indorsers, bound to pay the whole. And it follows, that if the bank comes upon the indorsers first, they must have the right to be recouped out of the security, unless the bank had an option to favor whichever set of those liable it pleased, 1 3 Bli. at p. 590. 464 CHICAGO AND ALTON R. E. CO. V. GLENNY. [CHAP. IIL which the reasoning of Lord Eldon seems to me to treat as manifestly inconsistent with the doctrine of equity. I have, therefore, come to the conclusion that the decision below ought to be reversed. I have not done so without some hesitation. For it is not to be de- nied that the result is that the indorsers of bills who happen to have dis- counted them with other banks are worse off than the appellants, who, by what as regards them is a lucky chance, have got the benefit of this securit}-. I am afraid to question the justice of a rule approved by such great lawyers as Lords Eldon and Redesdale, though Lord Eldon does not seem at first to have approved of Deering v. Lord Win- chelsea ; but if it were res Integra I am by no means sure that it would not have been better to say that every one should have the full extent of his rights given by contract, express or implied, and no more. But I think the unbroken current of authority from Deering v. Lord Winchelsea, decided in 1787, very nearly a century since, ren- ders it impossible now to indulge in such speculations. I agree to the order as to costs which has been proposed by the woble and learned Lord on the. woolsack. 1 ^ ,, a^C/5**- 77 — " — " ^*7 SPW <^&l V THE CHICAGQAND__ALTON R. R. CO. v. J. GLENNYr In the Supreme Court, Illinois, October 24, 1898. f~&4 • 'Zmr // • [Reported in 175 Illinois Reports, 238.] Mr. Justice "Wilkin delivered the opinion of the Court. 2 It appears that the property destroyed was partly covered by insur- ance, and the insurance company had paid the loss before this action was brought. It is said this suit is in fact brought by that company, the intimation being, that inasmuch as plaintiffs had received compen- sation for their loss from the insurance company they cannot maintain this action against the defendant. The insurer stood in the position of a suret} T , and having paid the loss~?or which the defendant, by~Ms negligence, was primarily liable, became subrogated to the rights "of the plaintiffs to the extent it "Had paid. If authority is needed in sup- port oi tnis proposition it will readily be found in our own decisions. Peoria Marine and Fire Ins. Co. v. Frost ; s Chadsey v. Lewis ; * American Express Co. v. Haggard. 5 Other cases might be cited to the same effect, but we regard the law so well settled that it cannot be seriously questioned. Judgment affirmed? 1 Compare Pitts v. Congdon, 2 N. Y. 352, and Havens v. Willis, 100 N. Y. 482. — Ed. 2 Only the opinion of the Court relating to subrogation is given. — Ed. 3 37 111. 333. * 1 Gilm. 153. 5 37 111. 465. 6 Mason v. Saintsbury, 3 Doug. 61 ; Clarke v. Inhabitants, 2 B. & C. 254; Yates v. Whyte, 4 Bing. N. C. 272 ; North of England Ass'n v. Armstrong, L. R. 5 Q. B. 244; SECT. I.] COOPER V. JENKINS. 465 COOPER v. JENKINS. In Chancery, before Sir John Romilly, M.R., February 10, 11, 1863. [Reported in 32 Beavan, 337.] The plaintiff Cooper was entitled, during the life of his wife, to some property designated as lots 1 and 2. The defendant, W. P. Jenkins, was entitled to an interest in reversion in the same property. By an indenture dated the 19th of March, 1822, W. P. Jenkins, and Cooper as his surety, mortgaged lot 2 for £250 and interest, but W. P. Jenkins alone received the money and alone covenanted to pay it. By a contemporaneous deed, dated the 19th of March, 1822, W. P. Jenkins conveyed his interest in lot 1 to a trustee, upon trust to save harmless and keep indemnified Cooper, and his estate in lot 2, from and against the pa3'ment of the sum of £250 and the interest thereof; and for that purpose, in case Cooper, or his life estate, should become liable to pay or make good, and should actually pay or make good, any sum or sums of money on account or in respect of the £250 or the interest thereof, then, upon trust, out of the rents and profits of lot 1, or by mortgage, sale, or other disposition thereof, to raise and repay to Cooper such sum or sums, with interest thereof after the rate of £5 per cent per annum. Cooper paid the interest on the mortgage from 1822, amounting to £420, and the interest on the sums so paid by him amounted to £456. In 1855, £100 (being the produce of part of lot 2, sold to a railway company) was applied in part discharge of the £250. Mrs. Cooper died in 1856, and Mr. Cooper's life estate thereupon ceased. The property had been sold, and lot 1 had produced £400, and lot 2 had produced £991. Out of the latter sum, the amount remaining due on the mortgage (£171) was paid, under an order made in 1862 in other suits. This bill, filed by Cooper in May, 1862, prayed the execution of the trusts of the indemnity deed of the 19th of March, 1822, and that the Simpson v. Thomson, 3 App. Cas. 279 (semble) ; Midland Co. v. Smith, 6 Q. B. D. 561 (semble); King v. Victoria Co., 1896, A. C. 250; Hall v. R. R. Co., 13 Wall. 367; Chicago Co. v. Pullman Co., 139 U. S. 79 ; iEtna Co. v. Hannibal Co., 3 Dill. 1 (semble) ; Marine Co. v. St. Louis Co., 41 Fed. R. 643; Springfield Co. v. Richmond Co., 48 Fed. R 360 ; Norwich Soc'y v. Standard Co., 59 Fed. R. 984 ; Railway Co. v. Fire Ass'n, 60 Ark. 325 ; Conn. Co. v. N. Y. Co., 25 Conn. 265 (semble) ; Regan v. N. Y. Co., 60 Conn. 124; Holcombe v. Richmond Co., 78 Ga. 776; Peoria Co. v. Frost, 37 111. 333 (semble); Atchison Co. v. Kansas Co., 7 Kas. Ap. 44 (semble); Rockingham Co. v. Bosher, 39 Me. 253 (semble); Leavitt v. R. R. Co., 90 Me. 153 (semble) ; Hart v. Western Co., 13 Met. 99 ; Monmouth Co. v. Hutchinson, 21 N. J. Eq. 107; Conn. Co. v. Erie Co., 73 N. Y. 399; Piatt v. Richmond Co., 108 N. Y. 358 (semble); Fayerweather v. Phenix Co., 118 N. Y. 324 (semble); Wunderlich v. Chicago, 93 Wis. 132; Allen v. Chicago Co., 94 Wis. 93; Quebec Co. v. St Louia^ I Low. Can. R. 222, 7 Moo. P. C. 286, Accord. — Ed. 30 466 MUSGKAVE V. DICKSON. [CHAP. III. £400 (the produce of lot 1) might be applied for the plaintiff's indem- nity, and that the deficiency of that sum might be paid out of Jenkins' share in the £991, the produce of lot 2. The Master of the Rolls. 1 My opinion remains the same as I expressed yesterday. The plaintiff cannot have the benefit of the mortgage on the principle of the Mercantile Law Amendment Act. He must proceed under one or other of the two rights which he claims. If he had bound himself to pay the mortgagee, and had done so, he would then have been entitled to the benefit of the mortgage. He has not done so, he has bargained, by a separate instrument, for an indem- nity which is perfectly distinct. This pa}'ment of interest was perfectly voluntary, but that does not affect the deed of indemnit}*, which is pre- cise, and entitles him to what he has paid, whether he was compelled to pa}' or not. If a surety pay off the mortgage, he is entitled to the bene- fit of all the securities. But here, the plaintiff has contracted with the mortgagor, for whom he is surety, that he should receive a particular species of indemnity, if he pay off any part of the principal or interest of the mortgage. That indemnity he is entitled to, and not to the benefit of the mortgage paid off. All I can do in this suit is, to make a decree for the enforcement of the indemnity deed. 2 ^ _ ^ .^ v ~s /SAMUEL MUSGRAVE v. H. S.^ICKSON and Others. In the Supreme Court, Pennsylvania, January 6, 1896. [Reported in 172 Pennsylvania Reports, 629.] k*^7 in) 77-O piNION D J Mr. Justice Fell, January 6, 1896. This proceeding is founded upon a petition by Samuel Musgrave, one -of the sureties on a replevin bond, for subrogation to the rights of the plaintiff in the judgment. An answer was filed by the appellant, the ~T^\ m (/ plaintiff, in which he averred that the judgment had not been fully paid. Subrogation rests upon purely equitable grounds, and it will not be enforced against superior equities. Unless the surety pays the debt in full he is not entitled to subrogation, and until this is done the creditor /JP will be left in full possession and control of the debt and the remedies fol' Us tilifoKMJTMht. Uenng v. Earl of W inchelsea f 4 ' Ky ner v. Kyner ; 5 1 The arguments of counsel are omitted. — Ed. 2 See Cornwell's App., 7 Watts & S. 305. —Ed. 3 Ewart v. Latta, 4 McQu. 983 ; McConnell v. Beattie, 34 Ark. 113; Schoonover v. Allen, 40 Ark. 132; Stamford Bank v. Benedict, 15 Conn. 437; Hardcastle v. Com- mercial Rank, 1 Ilarringt. 374, n. (a) (semble); Bridges v: Nicholson, 20 Ga. 90; Darst v. Bates, 51 111. 439 ; Connell v. McCowan, 53 111. 363 ; Corey v. Neff, 63 Ind. 391 ; Rice v. Downing, 12 B. Mon. 44; Glass v. Pulleu, 6 Bush, 346; Grieff v. Steamboat, -y 4 1 Leading Cases in Equity, 120. 5 6 Watts, 221. sect, i.] Douglass's appeal. 467 Bank v. Potius ; 1 Hoover v. Epler ; 2 Allegheny National Bank's Ap- peal. 3 The settlement of the account between the sureties and the defendant fixed the amount of the liability of the latter and the extent of the right to indemnity, but it did not affect the right of subrogation, which will never be allowed to the prejudice and injury of the creditor. The judgment is reversed and the record is remitted to the Court of Common Pleas in order that there may be a finding upon the issue raised by the answer of the appellant. DOUGLASS'S APPEAL. In the Supreme Court, Pennsylvania 1864. {Reported in 48 Pennsylvania Reports, 223.] Strong, J. 4 In the distribution of the proceeds of a sheriff's sale, the rights of those claiming to participate are to be determined as they were at the time the sale was made. Such a sale divests whatever liens are upon the lands at the time, and the lien-holders are turned over to the proceeds. No lien upon the fund, and consequently no right to participate in its distribution, can be acquired afterwards. These are familiar principles, and they are applicable to this case. The sheriff's sale of the real estate of Thomas McMasters was made on the 30th day of Januar} r , 1864. At that time the judgment of Robert Coulter against McMasters and Watson appeared from the record to have been satisfied. An execution had issued upon it to June Term, 1862, to which the sheriff had returned " money made." There was also indorsed a receipt of the plaintiff's attorney for the debt and interest in full. Thus the judgment was paid, and at law, certainly, it no longer had an} r existence. The next judgment to Coulter's was that of the appellant, under which the property was sold. It was not until the 1st of February, 1864, after the sheriff's sale, and nearly two j'ears after Coulter's judgment against McMasters and Watson had been satisfied, that Watson went into court, representing that he had been a surety of McMasters in that judgment, and as such had paid it, and obtained an order that he should be subrogated to the rights of the plaintiff. The order was made without any notice to Douglass, the next judgment creditor of McMasters. It was 12 La. An. 8 ; Hollingsworth v. Floyd, 2 Har. & G. 87 ; Union Bank v. Edwards, 1 Har. & J. 346 ; Neptune Co. v. Dorsey, 3 Md. Ch. 334, 7 Md. 164 ; Grove v. Brien, 1 Md. 438 ; Commonwealth v. Chesapeake Co., 32 Md. 501 ; Magee v. Leggett, 48 Miss. 139; Gannett n. Blodgett, 39 N. H. 150; Kyner v. Kyner, 6 Watts, 221 ; Bank of Penna. v. Potius, 10 Watts, 148; Hoover v. Epler, 52 Pa. 522; Brough's Est., 71 Pa. 460; Church, Pet., 16 R. I. 231 ; Gilliam v. Esselman, 5 Sneed (Tenn.), 86 ; Boston v. Brent, 87 Va. 385, Accord. —Ed. 1 10 Watts, 148. 2 52 Pa. 522. 3 19 W. N. C. 78. * Only the opinion of the Court is given. 168 DOUGLASS'S APPEAL. [CHAP. III. upon this state of the record that the Court below decreed that out of the fund now in court for distribution, arising from the sale of Thomas McMaster's estate, Watson should take the amount of the Coulter judgment to the rights of the plaintiff in which he was subro- gated on the 1st of Februaiy, 1864, after the sheriff's sale. We think the decree was erroneous. Whatever may have been Watson's equity against McMasters by virtue of the contract of suretyship, he could not enforce it to the prejudice of Douglass, after the sheriffs sale. Even the order of subrogation made, on the day after the sale, made him but the holder of an equity, and such an one as will not be enforced when thereby injustice will be done to the rights of others. It is a settled principle that the holder of an equit}' must be vigilant in asserting it, if he would have the aid of a chancellor. Laches in such a holder will always postpone him to one who may have been injured by his inertness. But here Watson, after having paid the judgment against his principal, remained qujet nearly two years without any assertion of his secret equity. He permitted the record to show con- tinuously during all that period that the judgment of Coulter against his principal was paid. While thus inactive, the sheriff's sale of the debtor's property took place. Thus the appellant was thrown off his guard by the state of the record. It was his right to assume that the judgment of Coulter was no longer in existence, and either refrain from bidding at the sale, or regulate his bid accordingly. It is not to be permitted that a secret equity may be held unasserted until holders of legal rights have lost an opportunity to protect themselves against it, and then brought forward to the injury of those who had no knowledge of its existence. It is insisted, however, that the decree of the Court ordering the subrogation of Watson to the rights of Coulter was con- clusive upon the auditor, and also upon all claimants to the fund for distribution. But of what was it conclusive ? Not, surely, of the claim that Coulter's judgment was a lien upon the land of McMasters when the sheriffs sale was made. It was doubtless an adjudication that Watson had a right, as against his principal, to use the judgment, but it gave to him no right at law. Notwithstanding the decree he was but the holder of an equity. The decree of subrogation is only a form ; it is the right to subrogation which is the substance: After the 1st of February, 1864, Watson was, therefore, in no better situation than he was before. His equitable right was liable to postponement because of his laches, as fully as if subrogation had never been decreed. Consequently an award of the fund in court was no attack upon what the Court had done. It left the decree of subrogation un- touched. Hence, there was nothing to preclude the appellant from asserting his claim to the fund in preference to any equitable claim of Watson. 1 1 Gring's App., 89 Pa. 336; Searight's Est., 163 Pa. 222, Accord. — Ed. SECT. I.] DINKGKAVE. SUCCESSION OF the Supreme o-»^-t-«*P -3 filed on the 3d April, 1878, a final account. He charged himself with $5,104.25, and credited himself with $5,186.90 mortgage and privilege debts, and $590.51 of ordinary debts were acknowledged, thus showing the estate to be insolvent. Among the debts stated as privileged was $2,500 paid the State of Louisiana as a mortgage creditor. The credit as to the $2,500 mortgage debt due the State results from the following facts : The deceased was a tax collector, and as such owed the State say $3,200, mostly for the revenues of 1876. The surely on his bond made an arrangement in 1877 with the Auditor of Public Accounts, by which the indebtedness was compromised or agreed to be compromised on the payment into the State treasury of twenty- five hundred dollars in valid State warrants. This having been done, on the 14th February, 1878, the Auditor of Public Accounts issued a quietus, in which he recited that, " whereas, B. H. Dinkgrave (through Jno. T. Ludeling for sureties) . . . has exhibited . . . the receipts of the Treasurer in full for the payment of the State taxes for the year 1874, $2,500, compromise settlement, I therefore issue this quietus.'* . . . The Auditor, whose testimony is in the record, says that the pay- ment was made in ''valid State warrants." The opponents contend that, as such warrants were only worth twent}* cents on the dollar at the date of the settlement, the estate is fairly chargeable only with the value of the warrants ; that is, $500, instead of their face value, $2,500, charged in the account. The lower court sustained the proposition, and, as a matter of fact, found the warrants were worth at the time of the settlement thirty cents on the dollar, and allowing for them at that rate reduced the credit from $2,500 to $750. We think it correctly applied the law and facts. T he contract of suretyshi p is essentially a beneficent one, and whilst the surety who paid was legally subrogated, he was so only to the extent ot his actual and necessary payment. If he made an advantageous settlement, the benefit of such payment was as muc h the principal's as his ow n. Indemnifi cation and not pro fit is t he measure of the surety's recourse against the principal, as taught b y o ur law and the jurisprudence thereunder. C. C. 3052 ; 7 N. S. 9 ; 5 R. 506 ; 3 A. 627. In tact such was tfie rule under the Roman law, whence the law of suretyship as existing in our Code has been in a large measure drawn. " /Sciendum est non in plus fidejussorem con~ seqiti debere mandati judicio quam quod solveret." 2 1 Only a portion of the opinion is given. — Ed. 2 Pickett v. Bates, 3 La. An. 627 ; Eaton v. Lambert, 1 Neb. 339, Accord. I f the surety proceeds against the principal on his collateral contract of indem nity. j^-*^T It is obvious that he can recover only what he paid to the creditor. Reed v. Norris, / ^ 470 FOWLER V. STRICKLAND. [CHAP. IIL C. F. FOWLER and Another v. F. G. STRICKLAND and Another. In the Supreme Judicial Court, Massachusetts, September Term, 1871. [Reported in 107 Massachusetts Reports, 552.] Contract, brought January 1 1 , 1870, on a promissory note for $2,000, dated August 2, 1869, signed by the defendants, and payable to the plaintiff or order in four months from date. The declaration was in the usual form of an action by payee against maker. At the trial in the Superior Court, before Pitman, J., "it appeared in evidence that the plaintiff indorsed the note for the accommodation of the defendants ; that the note was negotiated by the defendants to Haswell Loomis for its full value ; that the plaintiff took up the note, giving Loomis in payment three promissory notes signed by himself and Ro} - al Fowler, two for $300 each, and one for $400 ; and that the plaintiff paid no other consideration whatever for the note declared on. The jury returned a verdict for the plaintiff for the whole amount of the note and interest ; and the defendants alleged exceptions. 1 Gray, J. The note sued on being an accommodation note, and the action between the original parties, the consideration was doubtless open to inquiry. But the note was made for the accommodation of the defendants, the makers ; not of the plaintiff, the payee and indorser. The defendants, upon negotiating to Loomis the note thus indorsed b}' the plaintiff for their accommodation, received from Loomis the whole amount of the note, and were responsible to an equal amount in an action on the note by Loomis or any lawful holder. The plaintiff had the same right as airy other person to purchase the note from Loomis for such price as might be agreed on between them. Even if, by the terms of such an agreement, Loomis had retained any interest in the 2 M. & Cr. 361; Martin v. Ellerbe, 70 Ala. 326; Jordan v. Adams, 7 Ark. 348; Coggeshall v. Ruggles, 62 111. 401 ; Goodwin v. Davis, 15 Indiana Ap. 120; Miles v. Bacon, 4 J. J. Marsh. 457 ; Crozier v Grayson, 4 J. J. Marsh. 514 ; Gillespie v. Cres- well, 12 Gill & J. 36 ; Delaware Co. v. Oxford Co., 38 N. J. Eq. 151 ; Bonney v. Seely, 2 Wend. 481; Faires v. Corkerell, 88 Tex. 434, 437 (semble) ; Blow v. Maynard, 2 Leigh, 29 ; Kendrick v. Forney, 22 Grat. 748 ; Southall v. Farish, 85 Va. 403 (semble) ; Butler v. Butler, 8 W. Va. 674 ; Feamstier v. Withrow, 9 W. Va. 296 ; Mathews v. Hall, 21 W. Va. 510. The dictum in Hickman v. McCurdy, 7 J. J. Marsh. 555, 559, is not to be supported. Similarly, a surety who settles with the creditor for less than the par value of the debt must make a proportionate allowance in his claim for contribution from a co- surety. Owen v. McGehee, 61 Ala. 440; Stone v. Hammell, 83 Cal. 547 ; Williams v. Riehl (California, 1899), 59 P. R. 762; Hickman v. McCurdy, 7 J. J. Marsh. 555; Fuselier v. Babineau, 14 La. An. 764 (co-debtors) ; Sinclair v. Redington, 56 N. H. 146; Edmonds v. Sheahan, 47 Tex. 443 ; Acers o. Curtis, 68 Tex. 423, 425 ; Tarr v. Ravens- croft, 12 Grat. 642. — Ed. 1 The statement of the case is slightly abridged. — Ed. SECT. I.] LEAKE V. FERGUSON. 471 proceeds of the note which he delivered to the plaintiff, the latter, in an action against the defendants on the note, could have recovered the full amount thereof, although he might have held a part of the proceeds in trust for Loomis. If he purchased the entire interest of Loomis in the note, at the time of its delivery by Loomis to him, he might recover the whole amount to his own use. The defendants having received the whole amount of the note at the time of its original negotiation, and being now no longer liable to any action by Loomis, the amount of their liability in this action against them as makers of the note is not affected by the question how much the plaintiff paid to Loomis, or whether the sum recovered will belong to Loomis or to the plaintiff. If the note had been made by the defendants for the accommodation of the plaintiff, a different case would have been presented. Johnson v. Kennion ; 1 Reid v. Furnival ; 2 Wiffen v. Roberts ; 3 Babson v. "Web- ber ; 4 Ellsworth v. Brewer ; 5 Pinney v. McGregory ; 6 McGregor}' v. McGregory ; ' Allaire v. Hartshorne. 8 Exceptions overruled. 9 LEAKE v. FERGUSON. In the Col'rt of Appeals, Virginia, January Term, 1846. [Reported in 2 Grattan, 419.] At the June term of the General Court for 1817, the Commonwealth recovered a judgment against Jacob B. Fowler, William Miller, and three others, for the sum of $14,840, the penalty of a bond executed by them to Wilson Cary Nicholas, governor of the Commonwealth, to be discharged by the payment of $7,420. On this judgment an execu- tion of fieri facias was issued in July, 1817, which was never returned ; and in November, 1818, a ca. sa. was issued, upon which Miller was taken in execution, and delivered to the sheriff fifteen slaves in dis- charge of his body from custody ; and then, with James B. Ferguson as his surety, executed a bond to the officer for the forthcoming and delivery of the slaves on the day of sale. This bond was forfeited ; and in July, 1819, a judgment was obtained thereon against Miller and Ferguson. Miller and Ferguson proceeded to make payment upon the judgment against them until 1829, when an execution was issued for the balance remaining unpaid, against their lands and goods, and was levied upon the lands of Ferguson, which were sold, and the money made. 1 2 Wils. 262. 2 5 C. & P. 499, and 1 Cr. & M. 538. 3 1 Esp. 261. 4 9 Pick. 163. 5 11 Pick. 316. 6 102 Mass. 186. " 107 Mass. 543. 8 1 Zab. 665, 671. 9 Dorsey v. Creditors, 7 Mart. n. s. 498 ; Pace v. Robertson, 65 N. Ca. 550 ; Burton v. Slaughter, 26 Grat. 914, Contra. See Delaware Co. v. Oxford Co., 38 N. J. Eq. 151, \52.— Ed. 472 LEAKE V. FERGUSON. LCHAP SECT, ij PRESTON tt. 'H~*<- *r. l. PRESTON v. J. PRESTON and Others. r r "— T. .L. fKJKSTUJN V. J. ntJSMUJN AND UTHERS. • — — . ^M- t> 3 >i^X ^ ~z*<- d«~+f— *~&L w-^ -^~- -** ^^-^ -*- ^^~~ In toe CxJuiq^OF Appeals, Virginia, July Term, 1847. / \ /**< ( ^^zT^^r^^—~ [Reported in 4 Grattan, 88.1 —sv. ^* — =^— . / _£? ^ , his was a bill filed by Thomas L. Preston against John Preston, to * compel contribution to the satisfaction of a debt for which they wer e ^J /\ the sureties of William P. Floyd. The facts are as follows : — -^Pt**' O In September, 1841, James Rhea recovered a judgment against ^ +-& *** j! A. CHESTER and Others, Rejspondents/v. L. BRODERICK r DTHERi. ExECUTORSjETC, AfPELLA^^ ^^ i*rr*? * *** :t of Appeals, ^Ew / iori^V March 25, 1892- ^ ^*\ The general doctrine of subrogation may be assumed/^ ~p to be correctly stated by the counsel for the appellants, but the doctrine •" *~T\ itself has no application to the present case. Z&U-^ * The judgment creditor, having obtained the decree of foreclosure, .-*» a — ». had a right under it to sell the land described in the decree. The de- j^^JZZ fendants' testator became one of the sureties on the appeal bond given ' . ^ G» 1 Hull v. Pitfield, 1 Wils. 46 ; Wright v. Morley, 11 Ves. 12, 22 (sembfe) (see Hodgson ^ • v. Shaw, 3 M. & K. 183, 189); Armitage v. Baldwin, 5 Beav. 278 (semble) ; Dunlap v. ^f" Foster, 7 Ala. 734 ; Fletcher v. Menken, 37 Ark. 206 ; March v. Barnet, 121 Cal. 419^s~urety with a surety 6n the first h6nd of the guardian , bu t is bound to in- Tittle r. Bennett, 94 Ga. 405 ; Snow v. Brown, 100 (ia. 117. demnifv the ftM'ST s uTelyT See also to same effect, Field v. Pelot, McMull. Eq. 369; Bobo v. Vaiden, 20 S. Ca. 271 ; Morris 0. Morris, 9 Heisk. 814. In some cases the execution of a new bond with a new surety operates as a complete discharge of the surety for the same principal on an earlier bond. Peoples. Lott, 27 Til. 215; Lingle v. Cook, 32 Grat. 262. In so me jurisdictions the sureties o n the earlier of two successive bonds are primarily liab le as between themselves and the sureties on the later bond. Corrigan v. Foster, 51 Oh. St. 2^5. — Ed. 2 Only the opinion of the Court is given. — Ed. 478 CHESTER V. BRODERICK. ["CHAP. III. by the judgment debtor to stay proceedings pending the appeal, and thereupon the right of the creditor to enforce her judgment was tempo* rarily suspended. Upon the affirmance of the judgment by the Gen- eral Term, the defendant in the judgment took a further appeal to the Court of Appeals, and upon that appeal two other persons became sureties to stay proceedings on the judgment appealed from. The bonds were given pursuant to section 1331 of the Code, under which the amount is fixed by the court. In the bond given upon appeal to the General Term, that amount was fixed at $7,000, and upon appeal to the Court of Appeals it was fixed at $9,000. After the final affirm- ance of the decree for a foreclosure, the land was sold, and there re- sulted a deficiency of between $11,000 and $12,000. The plaintiffs, in order to obtain payment of such deficiency, collected from the sureties on the second or Court of Appeals bond the full amount thereof, viz., $9,000, and now ask to recover from the sureties on the first or General Term bond the balance of the deficiency, being about $2,500, and the}' have obtained a judgment for that sum, which the defendants seek to reverse on this appeal. The position of the counsel for the defendants is that the plaintiffs, by collecting the full amount of the bond on appeal to the Court of Appeals, exhausted the liability of the sureties on that instrument, who were primarily liable for the debt secured by both bonds, and the plaintiffs thereby discharged the sureties on the first bond, because such sureties were in that way deprived of the right of subrogation against the sureties on the Court of Appeals bond. Upon the facts herein there was no such right of subrogation. In Hinckley v. Kreitz, 1 it was simply held in a case of this kind, where there are two bonds on appeal, one to the General Term and one to the Court of Appeals, and when each contains an agree- ment to pay the amount directed to be paid by the judgment if affirmed, the primary liability in the event of affirmance rests upon the sureties to the bond on appeal to this court, and that their release by the judgment creditor without payment in full discharges the sureties in the General Term bond. This is no such case. There has been no release, but, on the contrary, the sureties on the second bond have paid its full amount to the very last penny. The counsel for the appel- lant claims that the first sureties were only secondarily liable, and yet upon his doctrine their liability amounts to nothing. The effect of his argument is to deprive the plaintiffs of all benefit of the first bond. If the sureties in the second one are first proceeded against, and a full recovery against them to the amount of their bond is obtained, and a deficiency still exists, the sureties in the first bond are not liable ac- cording to defendants' argument on the ground above stated. If, on the contrary, the}- are first proceeded against, and a recovery to the full amount of their bond ($7,000) obtained, they are in that event entitled to be subrogated to the plaintiffs' rights in the second bond to 1 58 N. Y. 583. SECT. I.] CHESTER V. BRODERICK. 179 the extent of such payment, and the plaintiffs can have only the bal- ance of $2,000, making the $9,000 of the second bond. In this way the first sureties are in effect completely exonerated ; for, although they have paid the $7,000 of their bond, yet they are entitled to recover it all back from the sureties on the Court of Appeals bond, leaving only the balance of $2,000 on that bond for the judgment creditor. Such contention prevents the use of the first bond for the purpose of recovering any part of a deficiency which exceeds the amount of the second. The creditor has simply a double securit}' for $7,000, and the single security of the second bond for $2,000 in addition, being the full amount of the second bond. This is not the real condition of the par- ties. T he creditor has the securit} - of the second bond, and the sure- ties thereon are primarily liab le. 1 Rut the creditor has also t he security of the first b ond for the payment of the deficiency if it exceed the amount of the second bond, and, therefore, when such excess in fact exists, no injur}' is done the nrst sureties by^obtaiuing thrrfull payment oi me second bond, and resorting to them for the balance up to the amo unt of their own b ond. There is in such 'event no right of subro- gation, because the security to which under other circumstances the first sureties might have had the right to resort has been satisfied bj- the full payment thereof, and the application of the proceeds to the payment of the liability for which it was originally executed. It cannot be said that in enforcing the obligation of the sureties in the second bond, the creditor has done any act which has injured the rights of the sureties in the first bond. The defendants have, therefore, shown no defence to this action, and the judgment must be affirmed, with costs. All concur. Judgment affirmed. 1 Chrisman v. Jones, 34 Ark. 73 ; Friberg, v. Donovan, 23 111. Ap. 58 ; Opp v. Ward, 125 Ind. 241; Kellar v. Williams, 10 Bush, 216; Dillon v. Scofield, 11 Neb. 419 (semble) ; Hinckley v. Kreitz, 58 N. Y. 583; Barnes v. Mott, 64 N. Y. 397; Culliford v. Walser, 158 N. Y. 65, 705; Daniel v. Joyner, 3 I red. Eq. 513; Hartwell v. Smith, 15 Oh. St. 200 (semble) ; McCormick v. Irwin, 35 Pa. Ill ; Coles v. Anderson, 8 Humph. 489; Briggs v. Hinton, 14 Lea, 233; Moore v. Lassiter, 16 Lea, 630; Mitchell v. De Witt, 25 Tex. Sup. 180; Hanby v. Heuritze, 85 Va. 177 (compare Rosenbaum v. Good- man, 78 Va. 121), Accord. Howe v. Frazer, 2 Bob. (La.) 624, Contra. But the relations Iwtwppn fHfforp.nt. sureties u pon successive appeals may be modi- ^ fled by agreement, so a s to give to the later su rety th e" rig hts oi _subrog atro n~and in- ^ dehinity again st" the earlier surety . Whitman v. Gaddie, 7 B. Mon. 591 ; Dillon v. Scoheld, UHeb. 419; Hartwell v. Smith, 15 Oh. St. 200; Yeager's App. 19 W. N. C. (Pa.) 151 ; Cowan v. Duncan, Meigs, 470; Harnsberger v. Yancey, 33 Grat. 527. See also Salvers v. Ross, 15 Iud. 130; Bradford v. Mooney, 2 Cincin. S. C. 468. — Ed. 480 HOLMES V. DAY. [CHAP. Ill WILLIAM A. HOLMES v. JOHN S. DAY. In the Supreme Judicial Court, Massachusetts, November, 1871. [Reported in 108 Massachusetts Reports, 563.] Contract against the surety in a recognizance taken by a magis- trate under the Gen. Sts. c 124, § 10. Writ dated November 1, 1870. The parties stated the following case to the Superior Court : — " On August 12, 1869, William A. Holmes brought an action of contract against William S. Matthews, and caused the attachment upon mesne process of certain personal property belonging to Matthews. On August 13 the attachment was dissolved by Matthews giving bond, with John E. Maynard and George W. Calef as sureties. Holmes re- covered judgment against Matthews in this suit at April term, 1870, of the Superior Court in this county, to wit, on May 4, 1870, for $191.32 damages, and $29.15 costs. This judgment not having been paid, Holmes brought an action upon the bond, and at July term, 1870, of the Superior Court aforesaid, recovered judgment against William S. Matthews, John E. Maynard, and George W. Calef, for $228.34 damages, and $10.52 costs. A writ of execution issued upon said judgment, in due form of law, on July 30, 1870 ; the affidavit and certificate required by law were annexed to the execution ; and Mat- thews was duly arrested by a proper officer on September 8, 1870, and on the same day brought before a master in chancery for this county ; and then and there Matthews as principal, and the present defendant John S. Day as surety, entered into the recognizance declared on in this case. Matthews did not observe, perform, or keep the condition named in the recognizance, but committed a breach thereof by not appearing for examination within the time stated. On October 31, 1870, Ma}'nard and Calef paid to Holmes the amount of his judgment against Matthews and themselves, together with costs accrued upon the same, amounting in the aggregate to $253.73, and immediately there- after caused the present action to be brought upon the recognizance, for their own benefit, in the name of Holmes as plaintiff, against said John S. Da}' as defendant. 1 Morton, J. If a judgment debtor, who has been arrested upon ex- ecution, and has entered into a recognizance with surety under the Gen. Sts. c. 124, pays the judgment, the surety is thereby discharged. Paj'ment of the judgment in full is a satisfaction for all damages for a breach of the recognizance, and no cause of action remains against the surety. In the case at bar there were three joint judgment debtors ; one of them was arrested on the execution, and entered into a recog- nizance, with the defendant as suret} 7 , and after a breach of the recog- nizance, the other two paid the judgment in full. As a general rule, 1 The statement is slightly abridged. — Ed. SECT. I.] TURNER V. DAVIES. 481 payment of a judgment by one of several joint debtors extinguishes the judgment as to all. Hammatt v. Wyman ; 1 Brackett v. Winslow ; 2 Adams v. Drake. 8 We think, in this case, the payment of the judgment b\ r Maynard and Calef was a satisfaction, and extinguished the claim for damages against the defendant. The doctrine of subrogation does not apply. Maynard and Calef, for whose benefit the suit is brought, and the defendant were sureties for Day under different contracts. There was no privity of contract between them. We can see no reason for holding, as between these parties, that the liabilitj- of the defendant was principal and primary, and that of Maynard and Calef secondary. If the defendant had been compelled to pa}' this judgment under his recognizance, he would have had a claim, as strong as that now urged b} T Maynard and Calef, to be subrogated to the rights of the plaintiff, and to continue the judgment in force against them. Judgment for the defendant} TURNER v. DAVIES. At Nisi Prius, before Lord Kenton, C. J., Trinity Term, 1796. {Reported in 2 Espinasse, 479.] This was an action of assumpsit for money paid, laid out, and ex- pended to the use of the defendant. Plea of non assumpsit. The action was brought to recover from the defendant a moiety of the sum of £23 paid b} r Turner, the plaintiff, on account of the debt of one Evans, and arose under the following circumstances. There being an execution in Evans's house, at the suit of Brough, to induce Brough to withdraw it, and to secure the debt, Turner, the plaintiff, and Davies, the defendant, joined in a warrant of attorney to Brough, but Davies had joined in consequence of having been applied to b}' Turner and Brough, who required an additional security. Turner, the plaintiff, took a bill of sale from Evans for his own security, dated 20th January, 1796 ; and an indorsement was made on it declaring the purpose for which it was given. Another execution having issued against Evans, the goods were taken in execution, and Turner, the plaintiff, had paid the whole of Brough's demand, and now brought this action against the defendant for contribution of the moiety. Lord Kenton. I have no doubt that where two parties became joint sureties for a third person, if one is called upon and forced to 1 9 Mass. 138. 2 17 Mass. 153. 3 11 Cush. 504. 4 Kane v. State, 78 Ind. 103; Dessar v. King, 110 Ind. 69; Morse v. Williams, 22 Me. 17, Accord. — Ed. 31 482 CRAYTHORNE V. SWINBURNE. [CHAP. III. pay the whole of the money, he has a right to call on his co-security for contribution ; but where one has been induced so to become surety at the instance of the other, though he thereby renders himself liable to the person to whom the security is given, there is no pretence for sa}'- ing that he shall be liable to be called upon by the person at w T hose request he entered into the security. 1 This is the case here ; Davies, the defendant, became security at the instance of Turner, the plaintiff, to Brough, and there is still less pretext for Turner to call on the de- fendant in this action, as he took the precaution to secure himself by a bill of sale. I am of opinion the defendant ought to have a verdict. The jury found for the defendant. Tic f!ff> LAYER v. NELSON. In Chancery, before Lord Jeffreys, C, May 3, 1687. [Reported in 1 Vernon, 456.] Where one obligee that is a surety is sued alone, by the custom of t he city of London he shall make his co-sureties c ontrib"ute~r-so wh ere a surety pays a debt, and has no counter- bond, by the custoTrt of the city of London he shall maintain an action against the principal. 1 1 Sid. 89, 1 Keb. 346, s. c. — Ed. SECT. II.] APPLETON V. BASCOM, 3CKER a. POPE. 499 At Nisi Prius, before Lord Mansfield, C. J., July 9, 1757. ^Ua^ S~& [Reported in 1 Setwyn, Nisi Prius (\3th ed.), 91.] This was an action brought by an administrator de bonis non of a ^, surety, who, at defendant's request, had joined with another friend of O-^- defendant's in giving a bond for the payment of the price of some * goods that were sold to defendant; and the surety having been obliged to pay the money, the administrator declared against the defendant for so much money paid to his use. Lord Mansfield directed the jury to find for the plaintiff; observ . ing, that where a debtor desires another person to be bound with him j ^£j^> or for him, and the surety is afterwards obliged to pay the debt, this I " . — — is a sufficient consideration to raise a promise in law, and to charge I the principal in an action for money paid to his use. He added, that he had conferred with most of the judges upon it, and they agreed in C that opinion. 1 -»9---? "X _ . &U+ tZyuL^L APPLETON and Another v. T. BASCOM and Others. In the Supreme Judicial GSotjrt, Massachusetts, October Term, ^7 • jMt • j^ [R n ed in 3 Metcalf, 169.] Thrs was an action of debt on a bond for the liberty of the prison limits, and was submitted to the court on the following facts: Tin> othy Bascom, one of the defendants, was administrator of the estate of Clement Bascom, and the plaintiffs were his sureties on his admin- istration bond, which they executed with him on the 3d of November, 1835. On the 21st of April, 1840, the plaintiffs jointly paid §230 for said Timothy's default, which they were bound to pay by reason of having been his sureties on said bond. At the December term, 1840, of the Court of Common Pleas, the plaintiffs recovered judgment against said Timothy, in an action for 1 In 1821 Lord Eldon said : " Until I became acquainted with that case [Toussaint v. Martinnant (1787), 2 T. E. 105], I thought the remedy must be in equity." Stirling v. Forrester, 3 Bligh, 575, 590. If th e surety is the executor of the principal he may retain from the principal's ass ets the allumut paid in his be half, and thus obtain a preference orerTjther creditors ^" oi the deceAPed. Boyd v. Rrooks, 34 Beav. 7 (overruling Anon., Godb. 149, 4 Leon. 236T! " If the surety, at the time of entering into the suretyship obligati on, tak e a counte r bond of in demnity irom the 1 princip al, Ins only remedy at common law is upon th e counter-hon d. The express contract excludes any implied promise of indemni ty. Toussaint v. Martinnant, 2 T. R. 100; Roosevelt v. Mark, 6 Johns. Ch. 266. — EdT 500 APPLETON V. BASCOM. [CHAP. III. money paid, the amount which they had paid, as aforesaid, by rea- son of his default. In that action, they filed a specification of their claim, setting forth that they demanded $230 paid by them on account of their having signed a bond as sureties of the said Timothy as administrator of Clement Bascom. Execution issued on said judg- ment, and said Timothy was committed to the jail at Lowell, on the 23d of February, 1841, and on the same day he, and the other defend- ants, as his sureties, executed the bond on which the present action was brought. Immediately after the execution of the bond, said Timothy went without the exterior limits of the city of Lowell, without the consent of the plaintiffs, and without being discharged by law. He afterwards took the poor debtors' oath. 1 Wilde, J. This is an action of debt on a bond given for the liberty of the prison limits, and the question is, whether the principal in the bond, after the giving of said bond, committed an escape by going without the prison limits. And this depends on ascertaining the time when the contract was made, on which the judgment was recovered, upon which the execution issued, by virtue of which the said principal in the bond was committed to prison. The said judg- ment was recovered in an action for money paid by the plaintiffs, and which they were obliged to pay, for said principal, by reason of his breach of the condition of an administration bond, which they had executed as his sureties. The action was founded on' an implied promise; and the question is reduced to this, whether the promise was implied by law at the time when the plaintiffs became sureties, or not until they paid the money, when their right of action against the defendant first accrued. And we t hink it is well settled, that when a surety becomes bound for his prin cipal and at his request, the law implies a pro mise of fndem- nity by the principal to the surety to repay the latter all the money he may be c ompelled to pay the creditor in con sequence of his assumed l iability. So the law is laid down in Wood v. Leland ; 2 and so it was decided in Gibbs v. Bryant, 3 in Toussaint v. Martinnant, 4 in Howe v. Ward, 5 and in many other cases. In Gibbs v. Bryant there had been given a written promise of indemnity, and the court say that "the written contract produced contained nothing more than what the law would imply. " And so the law has been well settled for a long time, although in ancient times no action at law could be maintained where a surety had paid the debt of his principal ; the only remedy being to be had in a court of equity. But very many equity principles have been adopted by courts of law in modern times, allowing actions to be maintained on implied promises by the party to do what justice and equity require to be done, where there is no express contract. And the implied promise of indemnity in the pres- 1 The arguments of counsel are omitted. — Ed. 2 1 Met. 389. 3 1 Pick. 121. * 2 T. R. 104. 5 4 Greenl. 200. SECT. II.] APPLETON V. BASCOM. 501 ent case must be considered as made at the time when the plaintiffs became responsible to the creditor on the bond. The plaintiffs' lia- bility was the consideration of the principal's implied promise of in- demnity, and the promise must be considered as made at the time when that liability was assumed. And the plaintiffs, when they paid the money, might have declared on said implied promise, or for money paid, in common form, as the declaration was. The time of making the contract is not to be determined by the form of the action. The other objection made by the defendants' counsel is, that the law does not imply a promise to the plaintiffs jointly; and the case of Gould v. Gould : seems to countenance this objection. But a more reasonable doctrine is maintained in other cases. Osborne v. Harper; 2 Pearson v. Parker; 3 Jewett v. Cornforth. 4 Acco rding to the decisions in these cast's, when money is paid by two or more sureties jointly^ for the principal, or when the money paid is raised on their joint credit, their proper remedy for reimbur sement is a joint action ; 5 but if they pay separately, then their proper remedy is by separate action, and a joint action cannot be maintained. 6 In either case, however, the action, whether joint or several, is founded on the promise of indem- nity expressly or impliedly made at the time when the sureties first became bound. When a promise is implied by law, such a promise is implied as will give to the party who may suffer damage by the breach of it a suitable and proper remedy. We consider, therefore, the promise of Bascom, to indemnify his sureties, as made to them jointly and severally; and as it appears that they paid the money, which they became liable to pay, jointly, they were well entitled to a joint action against him for reimbursement. Judgment for the plaiiitiffs. 7 1 8 Cow. 168. 2 5 East, 225. 3 3 N. H. 366. 4 3 Greenl. 107. 5 Osborne v. Harper, 5 East, 224 ; Dussol v. Bruguiere, 50 Cal. 456 ; Hull v. Myers, 90 Ga. 674, 686 (semble); Jewett v. Cornforth, 3 Me. 107; Lombard v. Cobb, 14 Me. 222, 224 (semble) ; Clapp v. Rice, 15 Gray, 557 ; Pearson v. Parker, 3 N. H. 366 ; Com- monw. v. Cox, 36 Pa. 442. — Accord. Kelby v. Skel, 5 Esp. 194; Gould v. Gould, 8 Cow. 168, contra. But one w ho pays jointly with others may sue alone for contribution from a co-surety wh o has not paid. Hi 2B. Mon. JW8. — Ed. — [ull Myers, 90 GaT 674 ; Atkinson v. Thaye?, — - 6 Graham v. Robertson, 2 T. R. 282 ; Brand v. Boulcott, 3 B. & P. 235 ; Lombard v. Cobb, 14 Me. 222; Prescott v. Newell, 39 Vt. 82, Accord. B ut the paving sureties may join as plaintif fs in a suit in equity for contribution agains t those who have not pai d Smith v. Kumsey, 33 Mich. 183 • Young v. Lyons, 8 Gill, lt>2; Fletcher v. Jackson, 23 Vt. 581.— Ed. " 7 Rice ». Southgate, 16 Gray, 142; Elwood v. Deifendorf, 5 Barb. 398, Accord. Similarly a surety is creditor of principal within Statute of Elizabeth as to co nvey- ances in fraud of cr editors trom tne time be becomes surety! Keel v. Larkin, 72 Ala. 493 ; Uragg v. Tatterson, 8^ Ala. '13$ ; Choteau v. Jones, 11 HI. 300 ; Hatfield v. Merod, 82 HI. 113; Sargent v. Salmond, 29 Me. 539; Williams v. Banks, 11 Md. 198, 242; Pennington v. Seal, 49 Miss. 518, 525; Loughridge v. Bowland, 52 Miss. 546; Car- lisle v. Rich, 8 N. H. 44 (semble). But see contra, Williams v. Tipton, 5 Humph. 66. So, also, if a testator is a co-surety with one of his legatees, and the latter assign^ - V * £/©02 BARCLAY AND PROCTOR V. GOO0H. [CHAR III. v BARCLAY and PROCTOR v. GOOCH. At Nisi Prius, before Lord Kenyon, C. J., July 11, 1797. [Reported in 2 Espinasse, 571.] This was an action of assumpsit brought to recover a sum of £50 on the ground of its being money paid to the use of the defendant. The plaintiffs were brewers, and the defendant was a publican, who rented one of their houses, at which a benefit club was held ; the members of the club distrusting the credit of Gooch (the then land- lord), the plaintiffs became his security for the amount of the subscription-money contained in the box ; this amounted to £50. Gooch became insolvent, and the club called upon the plaintiffs for the money as his security, and took their note of hand for it pay- able with interest. The question was, Whether this was a payment of money to the use of the defendant, on which the plaintiffs could recover on that count of the declaration ? Mingay, for the defendant, contended, that the giving a note for money due by the defendant to third persons was not sufficient to maintain an action for money paid, laid out, and expended to defend- ant's use. Lord Kenyon held, that the club having consented to take the note from the plaintiffs, it was as payment to them of the money due by the defendant; it was payment of money to his use, and so the action was maintainable. The plaintiffs accordingly had a verdict. Erskine and Praed, for the plaintiffs. Mingay, for the defendant. In the next term, Mingay moved for a new trial, but the Court agreed with his Lordship and refused a rule. 1 his legacy before the estate of the testator pays the creditor, the assignee takes subject to the right of the estate to reduce the legacy by the amount due from the legatee by way of contribution, for the equity to make this reduction arose contingently when the relation of suretyship was assumed by the parties. Baily's Est., 156 Pa. 634. — Ed. 1 McKenna v. Haruell, 13 Ir. L. Rep. 206 (but see Fahey v. Frawley, 26 L. 11. Ir. 78, 84, 90, 91); Pinkstou v. Taliaferro, 9 Ala. 547; Owen v. McGehee, 61 Ala. 440; Knighton v. Curry, 62 Ala. 404; Neale v. Newland, 4 Ark. 506; Jordan v. Adams, 7 Ark. 348; Anthony v. Percifull, 8 Ark. 494; Bone v. Torry, 16 Ark. 83; Stone v. Hammell, 83 Cal. 547 (semble) ; Stanley v. McElrath, 86 Cal. 449; Minns v. McDowell, 4 Ga. 182; Ralston v. Wood, 15 111. 159; Keller v. Boat- man, 49 Ind. 104 ; White v. Carlton, 52 Ind. 371 ; Nixon v. Beard, 111 Ind. 137 ; Reiter v. Cumback, 1 Ind. Ap. 41 ; Sapp v. Aiken, 68 Iowa, 699 ; Rizer v. Callen, 27 Kan. 339 ; Robertson v. Maxcey, 6 Dana, 101 ; Atkinson v. Thayer, 2 B. Mon. 348 ; Stub- bins v. Mitchell, 82 Ky. 535; Greene v. Anderson (Kentucky, 1897), 43 S. W. 195; Cornwall v. Gould, 4 Pick. 444 ; Chandler v. Brainard, 14 Pick. 285 ; Doolittle v. Dwight, 2 Met. 561 ; Hearne v. Keath, 63 Mo. 84 (semble) ; Chapman v. Garber, 46 Neb. SECT. II.] BARCLAY AND PROCTOR V. GOOCH. 503 i6 (sembk) ; Pearson v. Parker, 3 N. H. 366 ; Witherby v. Mann, 11 Johns. 518 ; Rod man v. Hcdden, 10 Wend. 498 ; Howe v. Buffalo Co., 37 N. Y. 297; Craig v. Craig, 5 Rawle, 91 ; Morrison v. Berkey, 7 S. & R. 238, 246 (semble) ; Peters v. Barnhill, 1 Hill (S. C), 236; Boulware v. Robinson, 8 Tex. 327 (semble) ; Bell v. Boyd, 76 Tex. 133 (semble), Accord. Brisendine v. Martin, 1 Ired. 286 ; Nowland v. Martin, 1 Ired. 307, Contra. Barclay v. Gooch was cited without dissent in Rodgers v. Maw, 15 M. & W. 445, 449 ; but see Taylor v. Iliggins, 3 East, 169 ; Maxwell v. Jameson, 2 B. & Al. 51. In Brisendine v. Martin, supra, Ruffin, C. J., said: — " In the instances of bank notes, property, or even passing a bill or note made by a third person and belonging to the surety, the party parts from a thing that is valuable in itself. But when he gives his own bond or note, he is, in fact, nothing out of pocket until he pays it. He has merely given a new security for the debt, and may never pay it. The discharge of the principal from the original demand is not sufficient to support the action; for that applies equally to a voluntary release given by the cred- itor at the instance of the surety, and in that case the action certainly would not lie. Now, there are many ways in which it may happen that the present plaintiff may es- cape from paying this debt. He may not be called on for it by the creditor ; or he may become insolvent ; or his note may be void, as founded on or connected with an usurious contract, for example : so that it is quite possible he may evade the payment. While that is so, however the parties may have treated the note in giving and re- ceiving it, the law cannot deem it equivalent to money. The plaintiff is, as yet, none the poorer by the defendant, and until he shall be, we think the action for money paid cannot lie. It is against elementary principles that it should. If, indeed, there had been with us a series of adjudged cases, as iu New York, or even one judgment of this Court, we should probably have been willing, if not felt ourselves bound, to follow the precedent. But we do not know of any such case, and we do not feel authorized, against principle, to make the precedent. At, one time it was held by Lord Kenyon, at Nisi Prius, and, it would seem, also by the Court of King's Bench, that a promis- sory note of the party's own, if taken in payment, might be considered as money. Barclay v. Gooch, 2 Esp. N. P. Rep. 571. But that case has not been followed ; and whenever it has been since mentioned, it has been disapproved. It was questioned and disregarded in Taylor v. Higgins, 3 East, 169. In Maxwell v. Jameson, 2 Barn. & Alder. 51, the surety took up the note of his principal by giving his own bond to the creditor ; but he was not allowed to recover for money paid. In that case the Court considered Barclay v. Gooch and Taylor v. Higgins inconsistent with each other, and therefore followed the last, especially as it was consistent with principle." A surety who gives his own bond, or non-negotiable note, in satisfaction of the principal's obligation, cannot, oeiore payment oi t ne pond or n on-negotiable not e, v., charge tne principal for indemnity, nor the co-surety tor contribution. Taylor v. Hig"^" gins, 3 East, 169 ; Maxwell v. Jameson, 2 B. & Al. 51 ; Bennett v. Buchanan, 3 Ind. 47 ; Romine v. Romine, 59 Ind. 346 ; Cummings v. Hackley, 8 Johns. 202 ; Brisen- dine v. Martin, 1 Ired. 286 ; Morrison v. Berkey, 7 S. & R. 238 ; Peters v. Barnhill, 1 H111 (S. C), 236, 237 (semble) ; Boulware v. Robinson, 8 Tex. 327. But see contra, Robertson v. Maxcey, 6 Dana, 101 ; Burns v. Parish, 3 B. Mon. 8. ^^- If land, go ods, or the obligations of a third person be transferred by the surety or £- taken from mm adversely in satista ction of the principal's obligation, the su rety is ""^^ allowed to recover the valtte ot the property so appropriated from th e principal or a proportionate sn are thereof from a co-surety . Rodgers v. Maw, 15 M. & W. 444; Hommell v. Uamewell, 5 Blackf. 5; Crozier v~7 Grayson, 4 J. J. Marsh. 514, 517 ; Lord v. Staples, 23 N. H. 448 ; Ainslie v. Wilson, 7 Cow. 662 ; Bonney v. Seely, 2 Wend. 481 ; Hulett v. Soullard, 26 Vt. 295; Fahey v. Frawley, 26 L. R. Ir. 78 (mortgage) ; McVicar v. Royce, 17 Up. Can. Q. B. 529. In Barber v. Gillsou, 18 Nev. 89, a surety transferring to the creditor a note which he held against the principal was permitted So charge the latter with the face value of the note irrespective of its collectible Value. — Ed. fe~7 *~*^$f-* ■ ^-^ **- ?AENEfiV. MOBBISOff. -^ *^e> -L^t^^ In the SupremS^udicial Court, Mi =^ £0H ■ v. RALPH G. MORRISON. LCHt^ETTs, January Term} 1862. [Reported in 3 Allen, 566.] Contract for contribution of one-half of the amount paid by the ^~P <_— plaintiff to take up the following note: "For value received, we jointly and severally promise to pay to Leonard Morse or order the sum of two hundred and seventy-two dollars, two years after date, without interest. Natick, July 17, 1854. Andrew J. Brown, Joseph yU - * ! *X Kemp, Joel W. Warner, Ralph G. Morrison." ^jr £j- ^ At the trial in the Superior Court the plaintiff testified that he signed the note as a surety, at the request of Brown; that the defend- h^_ J ^*«— ant was not present, and he never had any conversation with the > 4 * ^defendant as to signing the note; that he did not know how much money Morse gave for the note, but he paid the balance due upon it, f f ' after deducting some indorsements, in April, 1857. Morse, the payee, testified that he gave Brown and Kemp $200 for the note, $72 being included in the note for interest. Upon these facts, the case was reported by consent for the deter- mination of this Court. J. W. Bacon, for the plaintiff. T. H. Sweetser and E. F. Dewing, for the defendant. Bigelow, C. J. The plaintiff and defendant were co-sureties on the note. They were both bound by the same contract for the payment of the same debt. It is wholl y immateria l_that they signed at different times and without any agreement to become joint sure- ties. The flu hi ot contribution does no t arise out of any contract or agree ment between co-sureties to indemnify each other , but on the principle of equity, which courts of law will enforce, that where two persons are suojec i to a common burden, it shall be born e equally~be- tween them. In such cases, the law raises an implied promise from the mutual relation of the parties. Hence it follows that it does not make any difference as to the right to claim contribution, that each of the sureties was ignorant that the other was bound with him for the payment of the same debt. The liability to contribute may even exist, although the sureties are bound by distinct and separate instruments. It is sufficient th at it appears that they were under obligation to pay the same debt as sureties for a third person. The evidence in this case shows that the debt was contracted by Brown and Kemp, who received the money lent on the note, and that Warner and Morrison were jointly bound to the payee as sureties for the loan. M'Gee v. Prouty ; a Deering v. Winchelsea; Burge on Suretyship, 384. As the plaintiff has paid the whole amount due on the note, the 1 9 Met. 547. fi+1 SECT. II.] WARNEE V. MORRISON. 505 defendant is liable to contribute one moiety of that sum. It is no answer to this claim that there was a legal defence to the note. It „ does not appear that the plaintiff had knowledge that there was any *■"- u surious and corrupt agreement be tween the payee of the note and > / thepr incip als. AVithout such knowledge, he could make no defence. If the holder of the note had sued him, he could not have success- fully resisted his liability for the balance due upon it, unless he knew that a forfeiture of part of the debt had been incurred by usury. His voluntary payment of the note after its maturity was therefore in compliance with the terms of the contract into which he had entered, and creates a valid claim for contribution. A surety, hav- ing no defence, is bound to pay the debt. He is not obliged to incur the costs of defending an action. If he does, he cannot recover such costs of his co-surety, unless authorized by him to make a defence to the suit. Gillett v. Rippon; 1 Knight v. Hughes; 2 Bleaden v. Charles. 3 A fortiori, he has clone nothing to forfeit his right to claim contribution, when he has paid a debt to which he knew of no defence. If the defendant was aware of the existence of any ground on which the payment of debt could be successfully resisted, he was • bound to communicate it to the plaintiff, and give him notice to refuse to pay the note and to defend any action which might be brought to enforce it. Having omitted to do so, he cannot now set up the fact that a portion of the debt was forfeited under the statute against usury as a ground of defence against a claim for contribution. Judgment for the plaintiff.* i Mood. & Malk. 406. 2 Mood. & Malk. 247, and 3 C. & P. 467. 3 7 B; ng 246> * Carr v. Burns, 6 Ala. 780 (failure of consideration); Hichborn v. Fletcher, 66 Me. 209 (time given to principal) ; Godfrey v. Hennelly, 17 Vict. L. R. 70 (failure to give notice of dishonor), Accord. A surety who paid in igno rance of his principal's defence against the creditor _. / was allowed to recover indemnity in__Gasquet v. Oakey, 19 La. 76 (failure of consid- ^J^^^yi erafcion) ; Hyde v. Miller, N. Y. Ap. Div. (November, 1899), 60 N. Y. Sup. 974 ; Rus- ' sell v. Failer, 1 Oh. St. 327 (semble, usury); Stinson v. Brennan, Cheves, 15 (failure of consideration). If a surety pays with knowledge of the facts barring an action by the creditor ^ — ■ against the principal or co-sure ty, he cannot recover indemnity or contribu tion. White- V^ head n.'Peck, 1 Ga, 140 (usury) ; Craven v. Freeman, 82 N. Ca. 361 (surety a discharged ^? -u— ^ bankrupt, co-surety equitably released by creditor) ; Russell v. Failor, 1 Oh. St. 327 (usury) ; Davis v. Bauer, 41 Oh. St. 257 (alteration) ; Worthington v. Peck, 24 Ont. R. 535 (time given to principal). Ford v. Keith, 1 Mass. 139 (usury), coyitra, will hardly be followed. But see Kerr's Est., 17 Pa. Co. R. 193 (failure to give notice of dishonor). I f the surety's liability is by the terms of the instrument made conditional upon the p rincipal's default, and no defaul t 1ms occurred, the surety who pays the creditoFhas n o right to recover in demnity of the principal. Halsey v. Murray, 112 Ala? 185; Smith v. Staples, 49 Conn. 87 ; Bancroft v!~Abbott, 3 All. 524. A surety paid a judgment debt against his principal, but the judgment was after- wards reversed. He was not allowed to recover the money from the creditor, but should have sought reimbursement from the principal. Garr v. Martin, 20 N. Y. 306. See Keener, Quasi-Cont. 419. — Ed. 506 , BEAL 17. BROWN. /^[ CH _£_. NATHANIEL BEAL v. WILLIAM BROW^. trot REM e Judicial Court, SIassachusetts, October Term, 1866. [Reported in 13 J//en, 114.] Contract upon an account annexed. The defendant, admitting the correctness of the plaintiff's account, claimed in set-off a larger sum for money paid for the plaintiff, on a verbal guaranty of a debt from the plaintiff to B. F. Poland. 1 Bigelow, C. J. There was direct and positive evidence that the defendant, at the plaintiff's request, entered into a verbal guaranty of a debt due from the plaintiff, in pursuance of which the former subsequently paid the debt. This evidence, if believed, would have required the jury to find that the money charged in the accouut in set-off was paid at the special instance and request of the plaintiff, and that the item of money so paid was a valid set-off to the plain- tiff's claim. Of the credibility of this evidence, it was the exclusive province of the jury to judge; and it was erroneous to withdraw it from their consideration. The Statute of Frauds cannot avail the plaintiff as an answer to the set-off. Although the verbal guaranty was within it, and might have been avoided if the defendant had seen fit to rely upon the statute when called on by the plaintiff's creditor for the payment of the debt, the defendant was not bound to set it up. He had a right to perform his parol undertaking. It was a contract made on a good consid- eration, which the statute does not declare void or illegal, but only provides that no a ction shall be maint ained upon it against thT guarantor^ But this enactment is exclusively for the benefit of the guarantor, and is designed to protect him from the danger of being made liable for the debts of another by false testimony. He ma elect to fulfil his verbal promise, and, if he does so and pa ys money in pursua nce thereof, the principal debtor is liable for the amount as for money paid at his instance and reques t. The Statute of Frauds can have no operation as between the original debtor and his guaran- toK Cahill v. Bigelow. 2 Nor can the plaintiff resist the defendant's claim in set-off on the ground that he forbade the payment of the debt by the defendant. Even if such prohibition could be allowed to have any effect, if seasonably made, the evidence shows that it was not made until the defendant had become absolutely bound by his written promise for the payment of the debt. Exceptions sustained* 1 The statement of the case is omitted. — Ed. « 18 Pick. 369, 372. SECT. II.] TOM V. GOODRICH. 507 TOM v. O. GOODRICH and Others. In the Supreme Court of Judicature, New York, May, 1807. [Hi ported in 2 Johnson, 213.] This was an action of assumpsit. The declaration contained three counts: 1st. For money paid, laid out, and expended by the plaintiff for the use of O. Barber, O. Goodrich, A. Hosford, A. Hosford, Jr., and G. W. Barber, in the lifetime of the deceased partners. 2d. For money had and received by the same persons to the use of the plain- tiff. 3d. For money lent and advanced. The defendant pleaded the general issue, and gave notice that he should offer in evidence that, being a citizen of Connecticut, and residing in that State, he was dis- charged by the general assembly of that State in October, 1799, from all the debts owing by him individually, and as one of the said copartnership. The cause was tried at the New York sittings, the 19th June, 1806, before Mr. Justice Thompson. From the evidence produced at the trial it appeared that the above- mentioned partners carried on business in New York, as merchants, under the firm of George W. Barber & Co., from June, 1796, till some time in the year 1799. During that period Oliver Barber and George W. Barber were the active partners, and conducted all the business in the city of New York, where they resided. The other partners resided in Connecticut. On the 8th July, the 2d August, and the 22d October, 1796, the said copartnership imported goods, the property of the copartnership, into the city of New York, on which duties were payable to the United States, and which were regularly entered by George W. Barber, in the name of the copartnership, at the custom-house, in New York. On the 8th July, the 2d August, and the 22d October, 1796, George W. Barber as principal, and the plaintiff as his surety, executed four several bonds to the United States for the payment of the duties on the goods so imported, for George W. Barber & Co. George W. Barber died in January, 1799, and A. Hosford, the 7th April, 1804. The plaintiff, as surety, paid to the United States, in February, 1800, five hundred and one dollars and seventy cents, and in August, 1804, three thousand three hundred and thirty dollars and seventy-one cents, on account of the said bonds. On the evidence of these facts, the defendants' counsel moved for a nonsuit, which was overruled by the judge, and the jury found a verdict for the plaintiff. A motion was made on behalf of the defendants to set aside the verdict, and for a new trial. 1 1 The arguments of counsel are omitted. — Ei>. 508 TOM V. GOODRICH. [CHAP. III. Tompkins, J. In this case two questions arise for our determina- tion. 1. Whether the promise in the declaration ought to have been stated to have been made by those partners only who were living at the time the plaintiff paid the custom-house bond? 2. Whether the defendants are at all liable to the plaintiff in this action? There can be little doubt that no right of action, for money paid, laid out, and expended, arises in favor of a surety, against the principal, until the former has actually paid the debt, or his body has been taken in execution, upon a judgment therefor. Chilton v. Whiffin and Cromwell. 1 Before the plaintiff paid the first custom-house bond (at which time, if ever, his right of action against the partnership accrued), George W. Barber died; and previous to the second payment, as surety for the said George W. Barber, Aaron Hosford also died. The declaration is upon the assumpsit of all the partners living at the time the bonds were executed. In the case of Spalding and Another v. Muse and Others, 2 it was decided that in an action for money had and received, to the use of the plaintiffs, by three defendants, the former could not give evidence of money had and received to their use by the three defendants and another person who had since died. This doctrine proceeded upon the undeniable principle, that to entitle himself to recover upon a promise, the plaintiff must prove a promise, either express or implied, by the parties who are alleged in the decla- ration to have made it. The same doctrine has been recognized in this Court, in the case of Holmes & Drake v. De Camp. 3 There can be no substantial reason for applying a different principle in the action for money paid, laid out, and expended, or in a case where the promise proved is by three persons only, when the promise laid in the declaration is by those three persons and others whom they have survived. A plea in abatement is not necessary, where the contract is stated to have been jointly made by more persons than are proved, upon the trial, to have assumed; but the plaintiff, in such case, must fail upon the general issue of non assumpsit simul cum. As the objection to the plaintiff's right to retain the verdict, upon the ground of a variance between the contract proved and the one stated in the declaration, might be obviated by an amendment, it becomes necessary to decide whether the defendants are at all liable to the plaintiff for the money paid by him as security for George W. Barber, one of the partners. In my opinion they are not. The law does not imply a promise by all the persons who may be benefited, in consequence of payment by a surety, but only by the person whose debt is thereby discharged. In this case, upon the acceptance by the custom-house officer of the bond of the plaintiff and Barber, the claim of the United States for the duties secured thereby became con- fined to that bond, and the debt, if any previously existed in favor of the United States against all the partners for those duties, was i 3 Wilson, 13. 2 6 Term Rep. 363. s 1 Johns. 34. SECT. II.] BURNS AND McCONNOUGHY V. TARISH. 509 extinguished. The previous debt to the United States then became the debt of Barber only; and when the plaintiff became his surety, the promise of indemnity and the promise upon the payment of the money were implied against Barber only. I am, therefore, of opinion, that the motion for a new trial ought to be granted; but that liberty be given to the plaintiff to amend his declaration upon payment of the costs subsequent to the declaration. Thompson, J., was of the same opinion. Kent, C. J. I am of the same opinion, and would only add, on the merits of the case, that, as George Barber gave the bond to the United States, and became thereby responsible to the exclusion of his partners, the United States could look only to him. The plaintiff executed the bond as his surety, and cannot charge any other person as principal. There is no privity between the parties but what arises from the bond. It would be refining upon the doctrine of implied assumpsits, and going beyond every case, to consider the surety in a bond, as having, by that act, a remedy at law against other persons, for whom the principal in the bond may have acted as trustee. George Barber, the principal here, was, as it is stated, a surety for the debt of his firm, and that debt might perhaps have arisen by their being sureties for other persons still behind them. We can only look to the principal and surety in the bond to the United States, and to the obligations resulting from that relation, because the money was paid by the plaintiff in discharge of that bond, and in exonera- tion of the personal representatives of George Barber, who alone were legally responsible for that debt. It may be that George Barber had received a full indemnity from his partner when he gave the bond. We cannot, in this action, unravel the accounts between George Barber and his partners; and to push the implied assumpsit beyond the party to the bond may lead to great difficulties and produce injustice. New trial granted. 1 BURNS & McCONNOUGHY v. PARISH. In the Court of Appeals, Kentucky, September 9, 1842. [Reported in 3 B. Monroe, 8.] This action of assumpsit was brought by Parish against Burns & McConnoughy, for money averred to have been paid for their use and 1 Moore v. Stevens, 60 Miss. 809 ; Krafts v. Creighton, 3 Rich. 273, Accord. Durant v. Rogers, 87 111. 508; Sheby v. Champlin, 4 Johns. 461, 468; Donegan v. Moran, 53 Hun, 21 ; Wharton v. Woodburn, 4 Dev. & B. 507 ; Purviance v. Suther- land, 2 Oh. St. 478 (compare Russell v. Annable, 109 Mass. 72) ; Lowry v. Hardwick, 4 Humph. 188; Weaver v. Tapscott, 9 Leigh, 424, Contra. See Bowman v. Blodgett, 2 Met. 308, 311 ; Walden v. Sherburne, 15 Johns. 409 423; Donegan v. Moran, 53 Hun, 21. — Ed. 510 BUENS AND McCONNOUGHY V. PARISH. [CHAP. IIL at their request, under the following circumstances: Burns & McCon- noughy being partners in a mill and farm, a note was executed by McConnoughy individually, with Parish as his surety, for the hire of a negro man, for the year 1838, for the use of the firm of Burns & McConnoughy; the said negro man having been, at the date of the note, in the joint service and employment of the firm, and having so remained throughout the year, aud the hiring having been with the concurrence of Burns, and, so far as appears, without any obligation on the part of McConnoughy to furnish a laborer for the firm. On the note executed by McConnoughy and Parish a judgment was obtained against both, which was afterwards replevied by Parish as sole principal, with a security of his own, McConnoughy being no party to the replevy bond. Parish subsequently paid about $75, more than half of the debt, and the creditor gave him indulgence on the replevy bond for the residue. Whereupon he brought this action and obtained a judgment against Burns & McConnoughy, for an amount including, as well that part of the replevy bond which re- mained unpaid, as the $75 which he had actually paid. The first question arising on these facts is, whether the action could be maintained against both the defendants? And as the note was given by one of the partners for the hire of a negro, who was hired for the benefit of the firm, with the knowledge and consent of both partners, and the entire consideration of the note went to the benefit of the firm, and was so intended by both of its members, we think it entirely clear, that although Burns was not bound by the note, and the payment may, in the first instance, have inured to the benefit of McConnoughy alone, it inured ultimately and actually to the benefit of the firm, and that being made by Parish as the security of one of the partners, and therefore at his implied request, it was made virtually at the request of both partners, for whose benefit it operated, and was sufficient to raise an assumpsit on their part to reimburse the payment. 1 Were it even conceded that in consequence of the sepa- rate note of McCounoughy having been taken for the hire, the legal liability of Burns for that debt was merged. Still we are not pre- pared to admit that if Parish knew all these facts at the time of becoming McConnoughy's security, he might not, on making pay- ment, sue both partners jointly, on the ground that in truth and sub- stance he had paid, at the request of one, for that which, with a concurrence of both, had been acquired and used for their joint ben- efit. In the absence of any proof of such knowledge, we have no doubt of his right to maintain the action against both as jointly liable. 1 Burns v. Parish, 3 B. Mon. 8; Hikes v. Crawford, 4 Bush, 19, 6 Bush, 441 ; Hopkins v. Thomas, 61 Mich. 389; Garner v. Hutchius, 46 Mo. 399; Allen v. Coit, 6 Hill, 318; Springs v. McCoy, 122 N. Ca. 628; McKee v. Hamilton, 33 Oh. St. 7 (dis- tinguishing Peterson v. Roach, 32 Oh. St. 374) ; Hill v. Voorhies, 22 Pa. 68, Accord. Smith v. Sherman, 2 Cranch, C. C. 651; Dryer v. Sander, 48 Mo. 400; Uhler v Browning, 4 Dutch. 79, Contra. — Ed. SECT. II.] SIBLEY V. McALLASTER. 511 A second question arising on the facts is, whether the plaintiff was entitled to recover for more than he had paid in money. It has been heretofore decided, that when a security, against whom a separate judgment has been obtained, replevies and thus extinguishes the judgment, he may proceed against his principal as if he had actually paid money. And as by the creditor's acceptance of the separate replevy bond of the surety in this case, that bond operated as a merger and satisfaction of the joint judgment, tbe case is brought within the same principle, and the surety was entitled to recover the entire amount of the replevy bond. Wherefore, as the opinion of the Circuit Court in giving and refus- ing instructions were accordant with the principles herein asserted, the judgment is affirmed. J. Trimble, for plaintiffs. „ ^STEPHEN SIBLEY v. HUGH McALnAai^.^--- In the Superior Court of Judicature, NewHampshire, ' Jb*+-*-kL. <-xv *-"■ "^- ^December Term, 1836. ^f^ ' _ /. «■* £ ^-c^*- ^jpi \R e Vorted in 8 iptmUEfampsjure R£por(^;3S9.}^ _^ {/ This was an action of assumpsit, for $750 mone}- paid, laid out, and expended. The cause was tried at February Term, 1835, on the general issue, and a verdict taken, by consent, for the plaintiff, subject to the opinion of the Court upon the following case. Ebenezer Lerned, the defendant's testator, on the 25th July, 1827, gave to the Hopkinton Acaderm- his note of hand for $500, which was signed by the plaintiff as Lerned's suretj - . Lerned died on the 6th October, 1831, having made his will and appointed the defendant executor. The will was duly proved and allowed, and the defendant took upon himself the burden of executing it, on the 25th October, in the same year. In April, 1832, the secretary of the Hopkinton Academy spoke of the note to the executor, who said that he understood there was such a note. It did not appear that the note was exhibited to the defendant at any time within two years after the will was proved and allowed. On the 25th March, 1834, the plaintiff paid the note, and on the 27th of the same month demanded the amount thus paid, of the defendant. H. Chase and I. Bartlett, for the plaintiff. J. Harris, for the defendant. Richardson, C. J., delivered the opinion of the Court. Conceding, for the present, that the note not having been presented to the executor within two years after the grant of administration, no 512 SIBLEY V. McALLASTEK. [CHAP. III. action could have been maintained against him upon the note, we shall proceed to consider whether, notwithstanding this, the surety still remained liable? I t is well settled that a discharge of the principal under a bankrupt _____Jaw_does not discharge the surety^ J^'lagg v. Tyler ; * Welsh v. Welsh ; 3 " ^/^Martin v. Brecknell ; 3 The London Assurance Company v. Buckle. 4 And a creditor is under no obligation to prove his debt under a com- mission of bankruptc y of the princip al, unless the surety gives to the creditor an indemn ity for the expens e. 4 Johns. C. K. 132 ; 10 Vesey, 414 ; 6' id. 734 ; l l Johns. C. R. 562. The surety is the person who trusts the principal, and it is his busi- ness to see that the principal pays. A creditor is in no case bound to ■ — -^give notice to the surety that the debt is not paid. Hunt v. Brigham ; 5 f Sailly v. Elmore ; 6 Wright v. Simpson ; 7 King v. Baldwin. Such being the general rules of law, it is very apparent that if the principal die, and his estate be administered in the insolvent course, the creditor is under no obligation to present his claim to the commis- sioners, and procure what he may from that estate. He has a right, in such a case, to look to the surety for the whole amount. It is the business of the surety to procure the creditor to lay his claim before the commissioners, or to pay the claim and then lay his own claim before the commissioners for the money he may have paid to the creditor. In England and New York a surety may, upon certain terms, com- pel a creditor to proceed against the principal. The law is otherwise here. But this circumstance is immaterial in this case. In this State the surety may pay the debt when he pleases, and proceed against the principal himself. We are, therefore, of opinion that although no action could have been maintained against the executor upon the note at the time the plaintiff paid it, still the plaintiff remained liable upon the note, and that he is entitled to recover in this case whatever he paid to discharge himself from that liability. Judgment on the verdict. 6 1 6 Mass. R. 33. 2 4 M. & S. 334. 3 2 M. & S. 39. 4 4 J. B. Moore, 153. 5 2 Pick. 585. 6 2 Paige's R. 500. "' 6 Vesey, 734. 8 McBoon v. Governor, 6 Port. (Ala.) 32; Hooks v. Branch Bank, 8 Ala. 580; Sichel v. Carrillo, 42 Cal. 493 (semble) ; Reid v. Flippen, 47 Ga. 273 (qualifying Turner v. McCarter, 42 Ga. 491); Gieseke v. Johnson, 115 Ind. 308, 311 ; Walker v. Lathrop, 6 Iowa, 516; Braught v. Griffith, 16 Iowa, 26, 33; Godfrey v. Rice, 59 Me. 308 ; Hall v. Cresswell, 12 Gill & J. 36 ; Bullock v. Campbell, 9 Gill," 182 ; Berns- back v. Reiner, 8 Minn. 59 ; Scott r. Nichols, 27 Miss. 94 ; Miller v. Woodward, 8 Mo. 169; Marshall v. Hudson, 9 Yerg. 57; Brooks v. Brooks, 12 Heisk. 12 (semble); Beville v. Boyd, 16 Tex. Civ. App. 491, 495-496 (semble) ; Norton v. Hall, 41 Vt. 471, foAccord. On the same principle a surety, who pays before his own liabilit y is barred by /7/* / ^f the Statute of Limit ations, may recover contribution from a co-surety although" the t jHfedilor's I'lalin again st the latter was barred when the surety paid . "CawThorne v. ^-^"" / Vv eissinger, b Ala. 714, 716; Broughton v. Robinson, 11 Ala. 922 ; TTatterlin v. Spinks, SECT. II.] SIBLEY V. McALLASTER. 513 16 Ala. 467; Preslar v. Stalhvorth, 37 Ala. 402; Williams v. Ewing, 31 Ark. 229; May v. Vann, 13 Fla. 553 ; Crosby v. Wyatt, 23 Me. 156; Hill ?;. Morse, 61 Me. 541 ; Wood v. Leland, 1 Met. 387 ; Clapp v. Rice, 15 Gray, 557 (semble); Burton v. Ruther- ford, 49 Mo. 255 (snuble) ; Crosby v. Wyatt, 10 N. II. 318; 1'easlee v. Breed, 10 N. 11. 489; Boardman v. Page, 11 N. II. 431; Camp v. Bostwick, 20 Oh. St. 337 (compare Williamson v. Rees, 15 I >h. 572, as explained in 17 Oil. 354) ; Martin i-.Frantz, 127 Pa. 3S9; Knottsi>. Butler, 10 Rich. Eq. 143; Maxey v. Carter, 10 Yerg. 521 ; Reeves v. Pulliam, 7 Baxt. 119, 9 Baxt. 153; Glasscock v. Hamilton, 62 Tex. 143; Farris v Cockerell, 88 Tex. 428, 434 ; Aldrich v. Aldrich, 56 Vt. 324. But see contra, Slielton v. Farmer, 9 Baxt. 314 ; Cochran v. Walker, 82 Ky. 220. The doctrine of the principal case is recognized in the following cases, in which it was decided that the Statute of Limitations would bar the surety's right of indemnity after the lapse of the statutory period subsequently to the payment by the surety to ^-"'-^* the creditor. Buell v. Burlinghain, 11 Colo. 164 ; Hall v. Myers, 90 Ga. 674 ; Sexton v. Sexton, 35 Ind. 88 ; Wilson v. Crawford, 47 Iowa, 469 ; Preston v. Gould, 64 Iowa, 44; Hooper v. Hooper, 81 Md. 155 ; Magee v. Leggett, 48 Miss. 139; Conn v. Coburn, 7 N. H. 368; Thompson v. Stevens, 2 N. & McC. 493 ; Ponder t\ Carter, 12 Ired. 242; Hammond v. Myers, 30 Tex. 375. Payment before maturity. — If a surety pays the creditor before the claim is due,.-his. payment is treated, when the claim matures, as a payment at maturity . Golsen v. Brand775 111. 148 ; Jackson v. Adamson, 7 Blackf. 597; White v. Millet, 47 Ind. 385 ; Ross v. Menefee, 125 Ind. 432 ; Tillotson v. Rose, 11 Met. 299 ; Felton v. Bissell, 25 Minn. 20 ; Barber v. Gilson, 18 Nev. 89 ; Armstrong v. Gilchrist, 2 Johns. Cas. 424 ; Williams v. Williams, 5 Oh. 444 ; Craig v. Craig, 5 Rawle, 91. — Ed. Whether Principal may waive benefit of Statute of Limitations to prejudice of Surety. — In Whitcomb v. Whiting, 2 Doug. 652, it was decided that one of two or more co-obligors might revive a claim upon a debt barred by the Statute of Limitations, not only against himself, but also against his fellows. And by this doctrine the liability of a surety was continued or revived by a new promise or partial payment of the principal co-obligor. Burleigh v. Stott, 8 B. & C. 36 ; Wyatt v. Hodson, 8 Bing. 308 ; Dowling v. Ford, 1 1 M. & W. 329. But the authority of thes e decisions was destroyed by legislation, so that now a promise or partial payment by one co-iiliTTgc ,r will not, in England, affect the operation of the Statute of Limitations in favor ot any otner co-oDligor. Cockerill v. Sparkes, 1 II. & C. 699. Lord Mansfield's notion that each co-obligor has an implied authority to waive the benefit of the Statute of Limitations for his fellows was followed in many of the early decisions in this country. But those decisions have been generally superseded either by subsequent cases or by legislation, so that the prevailing rule here is the same as the modern English rule. Miller v. Miller, McArth. & Mack. 109 ; Kallenbach v. Dickinson, 100 111. 427 ; Bottles v. Miller, 112 Ind. 584; Mozingo v. Ross, 150 Ind. 688 ; Steele v. Souder, 20 Kan. 39 ; Davis v. Clark, 58 Kan. 454 ; Quinby v. Putnam, 28 Me. 419 (statutory) ; Peirce v. Tobey, 5 Met. 168 (statutory) ; Mainzinger v. Mohr, 41 Mich. 685; Willoughby v. Irish, 35 Minn. 63; Pfenninger v. Kokesch, 68 Minn. 81 ; Exeter Bank v. Sullivan, 6 N. H. 124; Whipple v. Stevens, 22 N. H. 219; Shoe- maker v. Benedict, 11 N. Y. 176 ; Winchell v. Hicks, 18 N. Y. 558 ; McMullen v. Raf- fertv, 89 N. Y. 456 ; Hance v. Hair, 25 Oh. St. 349; Coleman v. Fobes, 22 Pa. 156; Walters v. Craft, 23 S. Ca. 578 ; Carlton v. Ludlow Mill, 27 Vt. 496 (statutory) ; Nat. Bank v. Delavan, 53 Wis. 31 (statutory); Coleman v. Ward, 85 Wis. 328 (statutory). But in a few jurisdictions it is still the law that a partial payment by a principal obligor, made before the full statutory period has elapsed, will set the statute running afresh from that time as to the surety co-obligor. Cross v. Allen, 141 U. S. 528 (sem- ble) ; Clark v. Sigourney, 17 Conn. 511 ; Cox v. Bailey, 9 Ga. 467; Tillinghast v. Nourse, 14 Ga. 641 ; Rogers v. Gibbs, 24 La. An. 467 (semble) ; Hooper v. Hooper, 81 Md. 155 (semble) ; Block v. Dorman, 51 Mo. 31 ; Corlies v. Fleming, 30 N. J. 349; Copeland v. Collins, 122 N. Ca. 619 ; Woonsocket Inst. v. Ballou, 16 R. I. 355. If on the other hand the claim is once barred, a subsequent payment by the print* 33 514 STONE V. HAMMELL. [CHAP. III. H. P. STONE, Respondent, v. J. HAMMELL, Appellant. In the Supreme Court, California, April 2, 1890. [Reported in 83 California Reports, 547.] McFarland, J. 1 After further consideration upon argument on rehearing, we are satisfied that the judgment in this case should be reversed. The plaintiff with three other persons — Newell, Hamilton, and Hay- man — were sureties on a promissory note made try defendant, Hammell, to one Byron Stevens for three thousand dollars, dated July 1, 1877, and pa}able one year after date. Plaintiff claims that one of said sure- ties, Newell, paid on said note something over two thousand dollars, and that plaintiff paid to Newell, as his pro rata contributive share, one thousand dollars ; and this action was brought to recover said one thou- sand dollars of defendant, the principal on the note. The last payment made by Newell on the note to Stevens, as averred and found, was on January 10, 1881 ; and as his cause of action for the payments which he had made was not "founded on a written instru- ment," it was barred in two years, — that is, on January 10, 1883. Chipman v. Morrill. 2 But plaintiff did not give his notes to Newell until March 1, 1884. At that time defendant was under no legal obli- gation to any one which plaintiff could discharge b}' giving said notes. The original note given to Stevens had itself been long since outlawed. Therefore by giving said notes plaintiff acquired no cause of action against the defendant herein. We think, also, that the cause of action averred in the complaint would have been barred by the Statute of Limitations, which was pleaded cipal obligor will not, even in these jurisdictions, revive the claim against the surety co-obligor. Bordell v. Peay, 20 Ark. 293; Hooper v. Hooper, 81 Md. 155, 173; Long v. Miller, 93 N. Ca. 227 ; Goudy v. Gillam, 6 Rich. 28. The early English doctrine being based upon implied authority of parties to a joint obligation, a partial payment of a joint and several debt by the principal after the death of the surety did not interrupt the running of the Statute of Limitations in favor of the surety. For by the death of the surety they ceased to be joint contrac- tors. The executor of the deceased and the survivors were liable only as several debtors. Atkin v. Tredgold, 2 B. & C. 23 ; Disborough r. Bidleman, 1 Zab. 677, Spencer, 275, s. c. ; Lane v. Doty, 4 Barb. 530. And for the same reason a partial payment by the executor of the principal in a joint and several debt will not take the obligation out of the statute as to the surviving surety. Slator v. Lawson, 1 B. & Ad- 396 ; Hathaway v. Haskell, 9 Pick. 42 ; Smith v. Townsend, 9 Rich. 44. A fortiori a pa rtial paym ent by a prin cipal who w as never a co -obligor with tli£ surety can not co ntinue or rev ive the liability of the latter^^ ; _where_the s urety is an_ accommoda tion indorser n r s\ g uarantor . Hunter v. Robertson, 30 Ga. 479 ; Maddox v. Duncan, 143 Mo. 613; Meade~v. Mcuowell, 5 Binn. 195. But see contra, Hooper v. Hooper, 81 Md. 155, 173 (semble). — Ed. 1 Only so much of the opinion as relates to the Statute of Limitations is given. -— Ed. 2 20 Cal. 136. SECT. II.] MACE V. WELLS. 515 by defendant, even though plaintiff, on March 1, 1884, had actually paid Newell the one thousand dollars in money. Plaintiff seeks to avoid the running of the statute through the fact that within a month after the original note to Stevens matured he left the State, and resided out of the State for several years. His contention is, that as Newell's cause of action against him for contribution would not be barred while he remained out of the State, therefore his cause of action which he had against defendant, or which he proposed at some future time to have by paying his contributive share to Newell, would not be barred during his absence from the State, though such absence should be for fifty years. He contends that by returning at any time, and subjecting himself to Newell's claim and paying it, he could recover his part of it against defendant, although in the hands of Newell it had been outlawed for a quarter of a century. We do not think that the law of limitation of actions contemplates any such anomaly. When a man leaves the State, the Statute of Limitations does not run during his absence as to any cause of action against him ; but his absence does not prevent the statute from running as to any cause of action in his favor. At any time within two years after Newell had paid the original note plaintiff could have paid his contributive share to Newell and maintained an action for it against defendant. But he could not wait until the whole of Newell's cause of action against defendant was barred, and then revive one half of the claim by coming back years afterward and making a real or pre- tended payment of it to Newell. The whole claim was, as to defendant, dead ; and the breath of life could not be blown into one half of it by any such legal hocus-pocus. For the reasons above stated, the judgment and order appealed from are reversed, and the cause remanded for such further proceedings as respondent may be advised to take. TIMOTHY L. MACE, Plaintiff in Error, v. JARED WELLS. "^t *?* — 4.n*U J '5^3 +~**Z ^> 77 *-*& -^^-j^a IiL the Supr eme «Cqurt, Unit ed St^te^/J anua ry T erm, 184T). - 2^0 -^ "S \ Reported tnAHoward.272.] _ *<— ^Z^ Mr. Justice McLean delivered the opinion of the GJourt. 1 tf 7' This case is brought before the Court by a writ of error to the Supreme 2 -^ -C Court of the State of Vermont, 2 under the twenty-fifth section of the ^ ^ Judiciary Act of 1789. ^-t^w*/ Wells, as the surety of Mace, becafae bound in two joint and several if. notes, both of which were due before the passage of the bankrupt \siw^/^^y v< in August, 1841. In July, 1841, Wells paid one of these notes. Mace ^ySC++ut 1 Only the opinion of the Court is given. 2 17 Vt. 503. — Ed. 516 MACE V. WELLS. [CHAP. IIL was discharged, under the bankrupt law, on the 22d of March, 1843. In March, 1844, Wells paid the other note, and then sued Mace for the recovery of the money on both notes. The facts being submitted to the county court, judgment was entered for the plaintiff for the amount of the note last paid ; which judgment was affirmed by the Supreme Court ■f the (State. The fourth section of the bankrupt law provides that a "discharge iid certificate, when duly granted, shall in all courts of justice be deemed a full and complete discharge of all debts, contracts, and other engage- ments of such bankrupt which are provable under this act," &c. By the fifth section of the act it is provided that ' k all creditors whose debts are not due and payable until a future day, all annuitants, holders of bottomry and respondentia bonds, holders of policies of insurance, sureties, indorsers, bail, or other persons having uncertain or contingent demands against such bankrupt, shall be permitted to come in and prove such debts or claims under this act, and shall have a right, when their debts and claims become absolute, to have the same allowed them," &c. Wells, as surety, was within this section, and might have proved his demand against the bankrupt. He had not paid the last note, but he was liable to pay it, as surety, and that gave him a right to prove the claim under the fifth section. And the fourth section declares, that from all such demands the bankrupt shall be discharged. This is the whole case. It seems to be clear of doubt. The judgment of the State court is reversed. 1 l Liebke v. Thomas, 116 U. S. 605 ; In re Perkins, 10 TST. B. E. 529 ; Kyle v. Bostick, 10 Ala. 589 ; Lipscomb v. Grace, 26 Ark. 231 (overruling Payne v. Joyner, 6 Ark. 241) ; Post v. Losey, 111 Ind. 74 (real surety) ; Noland v. Wayne, 31 La. An. 401 ; Fer- nald v. Clark, 84 Me. 234; Hunt v. Taylor, 108 Mass. 508 ; Fisher v. Tifft, 127 Mass. 313 (explaining Morton v. Richards, 13 Gray, 15); Fairbanks v. Lambert, 137 Mass. 373; Crafts v. Mott, 4 N. Y. 603; Morse v. Hovey, 1 Saudf. Ch. 187; Tubbs v. Wil- liams, 9 Ired. 1 ; Fulwood v. Bushfield, 14 Pa. 90 (overruling earlier Pennsylvania cases); Stone v. Miller, 16 Pa. 450; Fisher v. Tifft, 12 R. I. 56; Hardy v. Carter, 8 Humph. 153, Accord. Under th e English Bankruptcy Acts of 1 809 a.nd 1 S9.fi the c ertificate of discharge in bankruptcy of a pri ncipal barred the surety's right of indemnity for paymen t of claims winch were provable (see note to next case, infra, 518) against the ba nkrupt by the cred- itor . Ex partd Lflbhon, 17 Ves. 334; Stedman v. Martinnant, 13 East, 427 ; Wood v Hodgson, 2 M. & Sel. 195 ; Ex parte Young, 3 V. & B. 40, 2 Rose, 46, s. c. ; Ex parte Ogilby, 3 V. & B. 133 ; Vansandau v. Corsbie, 3 B. & Al. 13, affirming s. c. 8 Taunt. 550; Westcott v. Hodges, 5 B. & Al. 12 ; Moody v. King, 2 B. & C. 558; Ex parte Carpenter, Mont. & M. 1 ; Bassett v. Dodgin, 9 Bing. 653 ; Haigh v. Jackson, 3 M. & W. 598 ; Filbey v. Lawford, 3 M. & G. 468 (explaining Yallop v. Ebers, 1 B. & Ad. 700) ; Jackson v. Magee, 3 Q. B. 48 ; and the rule is the same under the later English Bank* ruptcy Acts. — Ed. SECT. II.] " THAYER V. DANIELS. . ^ ,517 *—£_ ^U- '^r^~ -l^^-to ^^^^ yiUyr^t^ ri^~u& 4 WELCOME A. THAYER v. JOHN M. DANIELS. /^~+^1 A In the Supreme Judicial Court, Massachusetts, October Term, v 1872. S&~& [Reported in 110 Massachusetts Reports, 345.] — »— ^ / Contract. The declaration alleged that the defendant as prin- cipal, and the plaintiff as surety, signed a note for $500, dated Sep- J? Jp~ tember 28, 1861, and payable on demand to Nathan George or order, with interest. Jk^ttA^- At the trial in the Superior Court, before Bacon, J., it appeared that the plaintiff executed the note without any consideration, and for the accommodation of the defendant; that the defendant on February 11, 1862, filed his petition for the benefit of the insolvent law ; that a warrant was duly issued ; that at the third meeting of the creditors George proved the note against the defendant's estate; that a small dividend was then declared ; that afterwards, in August, 1862, the defendant was duly discharged from his debts; and that on May 1, 1865, the plaintiff paid to George on the note $500, which was less than the amount then due upon it, and took it up. The defendant asked the judge to rule that the Statute of Limitations began to run against the plaintiff's cause of action from the time the note fell due ; and that the discharge in bankruptcy was a bar to the action; but the judge refused so to rule, and ruled that on the fore- going facts the plaintiff was entitled to recover. The jury returned a verdict for the plaintiff, and the defendant alleged exceptions. 1 P. E. Aldrich (S. A. Burgess, with him), for the defendant. T. G. Kent, for the plaintiff. Ames, J. There was an implied promise, on the part of the de- fendant, as principal, to indemnify the surety, and to repay to him all the money that he might be compelled, in consequence of his lia- ^ ^ bility as surety, to pay to the creditor. Unt il the surety has been /A**^^ compelled to make such payment, t here is no br each of this implied — z > sC promise . The cause of action accrues then for th e first time, and ' t— C t he Statu te of Limitations then begins to run. Of course the excep- tion that the claim of the plaintiff is barred by that statute cannot be maintained. Appleton v. Bascom; Hall v. Thayer. 2 At the time when the defendant petitioned for the benefit of the insolvent law, the plaintiff's cause of action against him had not accrued. Nothing was due at that time from the insolvent to the plaintiff, and whether anything would become due depended upon the contingency of his being compelled to pay, and actually paying, the note, in whole or in part. If the plaintiff had taken up the note, } The statement of facts is slightly curtailed. — Ed. 2 12 Met. 130. 518 THAYER V. DANIELS. [CHAP. III. or made a payment upon it, at any time before the making of the first dividend, his claim for the money so paid would have been prov- able against the estate of the insolvent, under the Gen. Sts. e. 118, § 25, and would therefore have been barred by the discharge. But it appears from the report that no money was paid by the plaintiff as surety, and no cause of action accrued to him against the insol- vent, until long after the first and only dividend was paid from his estate. /The case of Mace v. Wells, which is relied upon by the defendant, arose under the Bankrupt Act of 1841, a statute which differed from our insolvent law, in allowing sureties and other parties under a con- tingent liability to prove such contingent liabilities as claims upon the estate, and "when their debts and claims become absolute," to \have them allowed. The defendants also insist that the debt itself was provable and was therefore discharged ; but this is not true as to the contingent claim of the surety. He had no claim that was provable under the statute, at the date of the discharge. Two other cases relied upon by the defendant, Wood v. Dodgson * and Vansandau v. Corsbie, 2 were decided under English statutes which in express terms make the contingent liability of a surety a provable claim against the bankrupt's estate. In the first of these cases the Court say that the statute was intended to benefit the sure- ties, by allowing them to share in the dividend before the estate is all gone, and before the actual payment of their liabilities. Neither of these decisions is applicable to a case under our insolvent laws. Exceptions overruled.^ l 2 M. & S. 195. 2 8 Taunt. 550. 3 Aiuslie v. Wilson, 7 Cow. 662 ; Buel v. Gordon, 6 Johns. 126, Accord. Under the English Bankrupt Acts of the last century only debts due at time of the act of bankruptcy were provable. A surety who had not paid the creditor at that time had, therefore, no provable claim against the principal, and hence the bankrupt's certificate did not bar surety's right to recover reimbursement from principal for any money paid by surety to creditor after the act of bankruptcy. Chilton v. Whiffin, 3 Wils. 13 ; Goddard v. Vanderheyden, 3 Wils. 262, 2 Bl. 794, s. c. ; Young v. Hock- ley, 3 Wils. 346 ; Vanderheyden v. De Paiba, 3 Wils. 528 ; Heskuysou v. Woodbridge, 1 Doug. 166, n. (55) ; Taylor v. Mills, Cowp. 525; Alsop v. Price, 1 Doug. 160; Paul v. Jones, 1 T. R. 599; Ex parte Lloyd, 1 Rose, 4 ; Wright v. Hunter, 1 East, 20. Un- der Bankrupt Act 49 Geo. III. c. 121, a surety had the right to prove directly or indirectly for any debt of the bankrupt to the creditor which was in existence at the time of commission issued. If the creditor's claim was not a debt when the principal became bankrupt, the surety had no provable claim against the principal, and there- fore might, on subsequently paying the creditor, recover from the bankrupt even after his discharge. Page v. Russell, 2 M. & Sel. 551 ; Welsh v. Welsh, 4 M. & Sel. 333 ; Hewes v. Mott, 6 Taunt. 329 ; M'Dougal v. Paton, 8 Taunt. 584 ; Taylor v. Young, 3 B. & Al. 521 ; Newington v. Keeys, 4 B. & Al. 493 ; Watkins v. Flannagan, 1 Gl. & J. 199 ; Watkins v. Flannagan, 1 Bing. 413 (affirming s. c. 3 B. & Al. 186) ; Freeman v. Burgess, 6 L. J. C. P. 34. Similarly a discharge of the principal debtor under the Lords Act did not relieve him from liability to reimburse a surety for a subsequent payment to the creditor. Macdonald v. Bovington, 4 T. R. 825. — Ed. n o J^xcneffuer lienor y aid to tile defei use. Flea, non in Trinit^ (r'S /Z~~L £/* JtniP.siT for money~"paid assumpsit. At the trial, before Parke, B., at the Middlesex Sittings Term, 1849, it appeared that the action was brought to recover the sum of £25 paid by the plaintiff under the following circumstances The plaintiff drew and indorsed a bill of exchange for £100 for the defendant's accommodation. It was delivered to the defendant, and he negotiated it; when due it was not paid by the defendant, but the plaintiff paid £25 to the holder, in part, and that sum he £^$ sought to recover from the defendant in this form of action. The bill, not being taken up, remained in the hands of the holder, in order that he might recover the remainder from the defendant and other parties, and there was no proof of due presentment to the defendant, nor of notice of dishonor. The learned judge directed a verdict for the plaintiff, reserving leave for the defendant to move to enter a nonsuit. 1 The judgment of the Court was now delivered by Parke, B. It must be taken for the purposes of this suit, that the plaintiff has paid the money without being compellable at law to do so. Now, to make a person liable in this form of action for money paid to the defendant's use, the plaintiff must not merely show, that the money paid pro tanto discharges the liability of the defendant to the holder of the bill, but also that it was paid at the request, express or implied, of the defendant. Here the money paid clearly dis- charges pro tanto the liability of the defendant, as acceptor, to the holder; and it is also clear, that there was no express request from the defendant to the plaintiff to. pay the money. It remains, therefore, to be seen whether there was, from the cir- cumstances, an implied request for him to do so. Now there is no doubt, that, if a person lends his name to another for his accommo- dation, the party accommodated undertakes to pay the bill at matur- ity, and further, to indemnify the person accommodating him, in case that person is compelled to pay the bill for him (Byles on Bills, p. 94) ; and this, no doubt, is an implied authority to such person to pay it, if he be in that situation that he may be compelled by law to pay the bill, though the holder do not actually compel him to do so; and after payment he may sue the party accommodated for money paid on his account; for such payment is, in truth, under the implied authority given by the contract of accommodation between the 1 The arguments and a small part of the opinion are omitted. — En. r*t ^A t *7 ^ S* 520 SLEIGH V. SLEIGH. [CHAP. IIL parties; and whether this be a payment of the whole bill, or of only a part of it, makes no difference. But the defendant, as the person a ccommodated, has not, we think, undertaken to indemnify the plaintiff against the consequences of any payment which the plaintiff may voluntarily make vVith knowledge of the circumstances. Whether it is so m cases in which the legaT~obligation has been discharged by circumstances unknown to him, as, for instance, by the creditor hav- ing given time to the principal debtor without his knowledge, it is unnecessary to determine; but where a payment is made, as in this case, with the knowledge onjthe part of the plain tiff that he was not bound t o pay, for tne w ant of a notice of dishonor, to which he was unquestionabl y entitled, we think the payment is not made with the implied authority of t ne detendan t. ItTis very true, that, if the plaintiff here had voluntarily paid the whole bill, he might have sued the defendant; but this is on another principle, viz., that the plaintiff becomes the holder of the bill after it is paid by him ; and a holder so situated may, according to the law merchant, sue the acceptor upon the bill itself; for the holder may always waive the want of due pre- sentment and notice, and sue the acceptor, who is not discharged by the want of it, but not a collateral party, who is discharged by the same laches. But the holder in such case does not sue him as for the money paid to his use, nor is a request, express, or implied, in such a case at all material to his recovering the amount. But here the plain- tiff cannot sue on the bill; for, not having paid it, he is not the hol der; and ne nas on these tacts only paia money to the holder vol- untarily, and without request, express or implied, from the defendant. We are, therefore, of opinion that the defendant is entitled to~a rule absolute to enter a nonsuit. Rule absolute. 1 1 Stanley v. McElrath, 86 Cal. 449 ; Houcktf. Graham, 106 Tnd. 195 (alteratioii.had released the surety, but not the principal) ; McClatchie v. Durham, 44 Mich. 435 (Statute of Limitations had run in favor of surety maker, but not in favor of principal maKe r ) ; Tmlway o. AntisTI el, 86 Mich. 82 (semble), Accord. TSTsurety, who pays a claim which he might have resisted as barred by the Statute of Limitations, cannot "charge a co-surety for contribution. Dussol ■y.Bruguiere, 50 Cal. 4t)b, 4D9 ; lviachado v. Fernandez, 74 Cal. 362, 363"7 Kimble v. Cummins, 3 Met. (Ky.) 327; Hatchett v. Pegram, 21 La. An. 722; Godfrey v. Rice, 59 Me. 308, 309; Hooper v. Hooper, 81 Md. 155, 174; Bamsback v. Reimer, 8 Minn. 59 (semble) ; Single- ton v. Townsend, 45 Mo. 379, 380 ; Green v. Milbank, 56 How. Pr. 382, 389 ; Wheat- field v. Brush Valley, 25 Pa. 112 ; Cocke v. Hoffman, 5 Lea, 105 ; Glasscock v. Smith, 62 Tex. 143, 158 (semble); Turner v. Thorn, 89 Va. 745. But see contra, Jones v. Blanton, 6 Ired. Eq. 115; Bright v. Lennon, 83 N. Ca. 183 (but compare Reeves v. Bell, 2 Jones, 254, and Craven v. Freeman, 82 N. Ca. 361, 362- 363) ; Mills v. Hyde, 19 Vt. 59 (but see Aldrich v. Aldrich, 56 Vt. 324,327). In Norton V. Hall, 41 Vt. 471, a surety paid a note after the remedy upon it was barred as to the principal, and would have been barred as to himself but for an agreement between the creditor and himself extending the time of payment. The principal was compelled to indemnify the surety. In Odlin v. Greenleaf, 3 N. H. 270, 271, it was left an open ques- tion whether a surety who paid a note, upon which all rights of action were barred by the Statute of Limitations, was entitled to reimbursement from the principal. — Ed. S.ECT. II.] AYMIS V. BURNS. A.YERS ^nd Another v. BURNS, Administrate -v ^Pftt. W^_ *-~-*L_ ^-i*~f~Ts^- s^t~~~2*9 ^^U^ O-CS^-J In the Supreme, Court, Inbiak^November Terbt^J.882. ^ " vy ^ — ^ v * rfT^^Zudinll Indiana Reporfs^^f/' ft** &' £L~dfc From the Hendricks Circuit Court. tj^-^) £ +& C. Foley, for appellants. / .^^^^^p L. M. Campbell and J. T. Burns, for appellee. {/ Howk, J. This was a suit by the appellee, administrator of the estate of Mary Ayers, deceased, against the appellants, Gardner Ayers, an infant, and Jonathan H. Johnson, guardian of such infant's person" and estate. Gardner Ayers being under indictment for the murder of his father, Mary Ayers, his mother, joined with him in the execution of two notes, for $250 each, to his attorneys employed to defend him. The plaintiff, as administrator of Mary Ayers, was obliged to pay those notes, and now seeks to recover the amount paid from Gardner Ayers and from the assets of the latter in the hands of his guardian. On these facts the Court below sustained the plaintiff's claim. 1 We are of the opinion that the facts found by the Court did not authorize its conclusions of law. The suit is founded upon an im- plied contract of the appellant Ayers to repay the money which the administrator of his surety had been compelled to pay on his promis- /f^^J^ sory notes. Such an implied contract, if it existed, was not binding, y and could not be enforced" against him during his infancy. Indeed, it / may well be doubted if his promissory notes, even though given for necessaries, could have been enforced against him during infancy in suits thereon by the payees thereof. In Henderson v. Fox 2 it was said: "The rule deducible from all the authorities is, that the only contract binding on an infant is the implied contract for neces- saries. Express contracts, as by bond or note, are not as such bind- ing, and cannot be enforced, without ratification, even if given for necessaries. For whether the articles furnished were, in the particu- lar case, necessaries, is a question of law to be determined by the Court. And if deemed necessaries, then their quantity, quality, and reasonable price is for the consideration of the jury. But if, on the contrary, the express contracts of infants, even when necessaries, so called, were the consideration, could be enforced, these important questions might be improvidently settled by the infant himself, beyond the supervision of the courts." 3 We have found no authority, in the reported decisions of this Court, or of other courts of last resort, for holding that an infant is liable upon such an implied contract or promise as the one in suit in the 1 The opinion of the Court is abridged. — Ed. 2 5 Ind. 489. 3 See Williamson v. Watts, 1 Ames, Cas. B. & N. 463 and n. 1. — Ed. ?' V *W 522 HODGES V. AEMSTRONG. [CHAP. III. case at bar. We are constrained to hold, therefore, as we do, that the Court erred in its conclusions of law upon the facts specially found, and that, for this error, the judgment below must be reversed. We are not prepared to say that the appellee might not recover of the infant, in a proper case, such reasonable sum as would be equal to the just value of the attorneys' services in the defence of such infant. But, in this case, there was no finding by the Court of the just value of the attorneys' services, which were found to be neces- sary, or, indeed, that they were of any value. What we decide is that the special finding of facts by the Court, in this case, did not authorize its conclusions of law. 1 JOHN HODGES v. F. ARMSTRONG, Administrator. In the Supreme Court, North Carolina, December, 1831. [Reported in 3 Devereux, 253.] Assumpsit for money paid to the use of the defendant, tried before his Honor, Judge Daniel, at Cumberland, on the last spring circuit. On the trial, upon non assumpsit pleaded, the case was as follows: — The plaintiff was the surety of the defendant's intestate and of one William Hodges, upon a bond payable to one McArthur; before the bond became due the principal debtors died, and the plaintiff admin- istered upon the estate of William Hodges, and the defendant upon that of Armstrong; suit was brought by McArthur against the plain- tiff and defendant in their representative characters, and against the plaintiff upon his personal obligation. On the trial, the plaintiff, as administrator, established the plea of fully administered; and judg- ment was taken against the present defendant, de bonis intestati, and against the plaintiff, as administrator, quando, and in his own right absolutely. To protect himself, the plaintiff, through the interven- tion of a third person, paid the amount of the judgment to McArthur's attorney, and procured an assignment of it to be made to a trustee for his benefit, and issued a scire facias to obtain execution against the present defendant, de bonis propriis ; but the payment by the plaintiff having been held to be a satisfaction of the judgment, he 1 But see Conn v. Coburn, 7 N. H. 368, in which case the distinction taken by the Indiana Court would seem to have been overlooked ; and compare Clarke v. Leslie, 5 Esp. 28 ; Kilgore v. Rich, 83 Me. 305 ; Swift v. Bennett, 10 Cush. 436 ; Randall v. Sweet, 1 Den. 460, in which cases one who paid, without assuming any liability to pay, for necessaries furnished to an infaut was permitted to recover the amount paid from the infaut. If by a statute an infan t is made liable to the creditor for certa in contracts, he is also bound to indemnify one who is his surety in such contracts, e. g. a recognizance; Fagin v. Cioggin, 12 HI' 1. 398. — En. ' SECT. II.] HODGES V. ARMSTRONG. 523 failed in that action and then commenced the present. Upon these facts it was objected that the plaintiff could not recover, because he had not paid the money to the use of the defendant, but had purchased a judgment against the defendant, and that his proper redress was either by scl. fa. or debt upon that judgment. But the presiding judge ruled that the payment was one which would support the action. 1 W. H. Haywood, for the defendant. Gaston, for the plaintiff. Ruffin, J. As a surety cannot maintain an action against his principal merely upon the rendering of a judgment against the former, it was material and necessary that the plaiutiff in this case should show a satisfaction of the judgment by a payment made by himself. To make that fact appear, he proved that he deposited the money with a friend, to be delivered to the original creditor, with express direc- tions not to pay it in discharge and satisfaction of the judgment, but to take an assignment thereof, for the purpose of keeping it in force against the defendant. The agent complied with the instruc- tions, and took from McArthur an assignment to himself, in trust for the plaintiff. This transaction was held in the Superior Court to be a payment. This Court entertains a different opinion. There was no satisfaction of the judgment acknowledged of record; no release of it; nor any receipt of money as and for a payment of it. No payment was intended. Both the testimony of the witness and the deed of assignment prove that the contrary was intended. The question then is, whether, against the intention of the parties, the payment shall be deemed to be in satisfaction, because the money belonged to one of the defendants in that suit. We think not. It is a common mode whereby a surety indemnifies himself. He may relinquish it by making payment in satisfaction. But he may make the payment, not in satisfaction, and take an assignment. If the surety is not a party to that suit, he may take the assignment to him- self. This is generally done by an indorser, who is not sued jointly with the maker. It is greatly for the benefit of sureties that it should be so; for many of the rights of the surety are secured only through this principle of subrogating him to the securities of the creditors, and entitling him to an assignment of them. Hence, if the creditor does any act which puts it out of his power to make an assignment to the surety, the latter is discharged. By taking an assignment, the judgment is preserved, and satisfaction may be obtained from the principal by immediate process; which is of great consequence in a case of insolvency or the death of the principal. If the judgment be joint against the surety and the principal, the former does not thereby lose his right to an assignment. If he did, all claim to the benevolence of the creditor would fall with it. He cannot indeed take the assignment, in that case, to himself, for that would be an 1 A part of the case foreign to suretyship is omitted. — Ed. 524 PIEfiCE V. WILLIAMS. [CHAP. III. extinction of the judgment. But he may take it to another person. In law, the plaintiff alone is the owner of the debt. The assignee can act in his name alone. And a court of law can take no notice of the trust, upon which the assignee or the plaintiff keeps up the judg- ment. But if we could, we would not make the legal right unite with that of the cestui que trust. It is like the owner of an inheritance taking a conveyance to a trustee of an outstanding satisfied term- The interposition of the trustee keeps the legal and equitable estates apart, even in equity — much more at law. There is no doubt that McArthur may yet acknowledge satisfaction of record, or the assignee may do it in his name, provided the terms of the assignment authorize it. But until that be done, or the judg- ment be otherwise discharged, in such wise as to bar a suit on it at law, it remains in force. While it does, the surety cannot maintain an action, of which the gist is the satisfaction of that judgment. Per Curiam. Judgment reversed. 1 PIERCE v. WILLIAMS. In the Exchequer, June 21, 1854. [Reported in 23 Law Journal Reports, Exchequer, 322.] This was an action, by the plaintiff, to recover certain moneys and costs that he had been called upon to pay for the defendant under a guaranty entered into for him, by which the plaintiff guaranteed to the National Provincial Bank of England " that the defendant should upon demand from time to time pay to them what was due." A demand had been made upon the defendant by the National Provin- cial Bank for the amount due, and upon non-payment they issued a writ against the plaintiff for the amount, the writ being the first noti- fication to him of the amount being due and unpaid by the defendant. The plaintiff allowed judgment to go by default, and execution was subsequently levied for the amount of the debt and costs. He then brought the present action, and at the trial, before Williams, J., at Beaumaris, at the Spring Assizes, recovered a verdict for the full amount of the debt and costs that had been levied under the execution. A rule nisi was subsequently obtained to reduce the damages by the amount of the costs, against which Mclntyre showed cause. The principal debtor is liable for these costs, just as a party who has accepted a bill for the accommodation of the drawer may, if sued, recover against the drawer the costs of the action. Jones v. Brooke; 2 Stratton v. Matthews. 3 1 Katz v. Moessinger, 110 111. 372, Contra. — Ed. 2 4 Taunt. 464. 3 3 Ex. 48. SECT. II.] HAKE V. GKANT. 525 [Aldkrson, B. That must be on some ground peculiar to an accom- modation bill. 1 ] How could the present plaintiff know what he was to pay? At least the costs of the writ should be recovered. Morgan Lloyd, contra, was not called upon. Per Curiam. 2 The costs of the writ only can be recovered, as that was the ouly necessary expense to which the plaintiff was put by the proceedings. He is supposed by law to have the money ready to pay without the process of execution. 8 JACKSON B. HARE v. JAMES W. GRANT, Administrator. In the Supreme Court, North Carolina, June Term, 1877. [Reported in 77 North Carolina Reports, 203.] Civil action tried at Spring Term, 1877, of Northampton Superior Court, before Buxton, J. James Clark, the intestate of defendant, was the guardian of one James P. Harrell, and the plaintiff was surety on his guardian bond. The plaintiff alleged that in an action brought on this bond by Har- rell, he was compelled to pay the amount demanded as due to the ward, as appeared by a return of said guardian made in 1851. At the trial term of said action, a nolle prosequi was entered as to the administrator of the deceased guardian, and judgment rendered against this plaintiff. This action was brought to recover back the 1 Jones v. Brooke and Stratton v. Matthews, although approved and followed in Hubbly v. Brown, 16 Johns. 70 (but see Wilkins v. Pearce, 5 Den. 541, 544), and Baker v. Martin, 3 Barb. 634, are not to be relied upon, being at variance with the fol- lowing cases: Roach v. Thompson, M. & M. 487 ; Beech v. Jones,-5 C. B. 696 ; Garrard v. Cottrell, 10 Q. B. 679 ; Crampton v. Walker, 30 L. J. Q. B. 19, 7 Jur. n. s. 43, s. c. See also Mayne, Damages (2d ed.), 47 ; Seaver v. Seaver, 6 C. & P. 673 ; Bleaden v. Charles, 7 Bing. 246. — Ed. 2 Alderson, B., Piatt, B , and Martin, B. 3 Fisher v. Fallows, 5 Esp. 171 ; Knight v. Hughes, M. & M. 247, 3 C. & P. 467, s. c. ; Gillett v. Rippon, M. & M. 407 ; John v. Jones, 16 Ala. 454 ; Beckley v. Munson, 22 Conn. 299; Comegys v. State Bank, 6 Ind. 357 ; Newcomb v. Gibson, 127 Mass. 396, 399 ; Backus v. Coyne, 45 Mich. 584 ; Van Petten v. Richardson, 68 Mo. 379; Board- man v. Paige, 11 N. H. 431 ; Stothoif v. Dunham, 4 Harr. (N. J.) 181 ; Bright v. Len- non, 83 N. Ca. 183, 188 (semble) ; Wynn v. Brooke, 5 Rawle, 106, Accord. Kemp v. Finden, 12 M. & W. 421 ; Van Winkle v. Johnson, 11 Oreg. 469 ; Briggs v. Boyd, 37 Vt. 541, Contra. But the surety may charge the principal with the whole, or a co-surety with a propor- tionate share, of the costs and expenses reasonably incurred in resisting an action by the creditor. Wagenveller v. Prettyman, 7 111. Ap. 197; Bosley v. Taylor, 5 Dana, 157 ; Backus v. CoyDe, 45 Mich. 584; Bright v. Lennon, 83 N. Ca. 183 ; McKennai-. George, 2 Rich. Eq. 15; Cleveland v. Covington, 3 Strob. 184 ; Gross v. Davis, 87 Tenn. 226; Marsh v. Harrington, 18 Vt. 150 ; Fletcher v. Jackson, 23 Vt. 581 ; Downer v. Baxter, 30 Vt. 467 ; Briggs v. Boyd, 37 Vt. 541. —Ed. 526 HARE V. GRANT. [CHAP. IIL money paid by the surety for his principal, and when the case was called for trial, the defendant's counsel moved for a continuance on the ground that the defendant was absent, and that he, the counsel, was informed that defendant had in his possession vouchers showing payments made by said guardian to his ward after the guardian's last return, which was made on the 23d of May, 1859. The Court refused the motion to continue and the defendant excepted. The plaintiff introduced the transcript of certain court records, execution, &c. , showing that he had paid the debt, and under the instructions of his Honor the jury rendered a verdict for plaintiff. Judgment. Appeal by defendant. Messrs. D. A. Barnes and W. N. H. Smith, for plaintiff. Messrs. R. B. Peebles and W. W. Peebles, for defendant. Reade, J. Where a surety is sued with his principal, or where he is sued alone and notifies his principal, so as to enable him to defend, or to furnish the surety with a defence, the recovery against the surety is the measure of his damages against his principal. And in an action, as this is, to recover of his principal money paid to his use, the record of the recovery against the surety is conclusive evidence. It would be iniquitous for the principal to stand by and see an excessive recovery against his surety, which he alone could prevent, and then set up the defence when his surety sues him. Of course this principle would not apply where there was fraud or collusion between the surety and creditor. And probably it would not apply where there had been negligence on the part of the surety in using the defences within his power, or which were furnished him by the principal. In this case no fault attaches to the surety. Lewi? v. Fort. 1 There is no error. Per Curiam. Judgment affirmed. 1 75 N. Ca. 251. 2 Smith v. Compton, 3 B. & Ad. 407 (semble) ; Rice v. Rice, 14 B. Mon. 417; Lit- tleton v. Richardson, 34 N. II. 179, Accord. The rule is the same in cases in which the surety is seeking contribution. Love v. Gibson, 2 Fla. 598. If, however, the surety pays a judgment against himself, obtained without an oppor- tunity for the principal or co-surety to resist the action, they may resist a subsequent claim for indemnity or contribution by establishing that the judgment against the surety ought not to have been obtained. Cathcart v. Foulke, 13 Mo. 561 ; Skraiukar. Itohan, 18 Mo. Ap. 340 ; Thomas v. Hubbell, 15 N. Y. 405; Mahin v. Bull, 13 S. & R. 441 ; Krampli v. Hatz, 52 Pa. 525 ; Lowndes v. Pinckney, 1 Rich. Eq. 155. Judgment in favor of one surety and against another surety. — In Hill v. Morse, 61 Me. 541, judgment being given in favor of two sureties in an action by the creditor, and being reversed on appeal by the creditor as to one of them, this surety was allowed to have contribution against the other notwithstanding the judgment in his favor against the creditor was still effective. But see Ledoux v. Durrive, 10 La. An. 7. — Ed. SECT. II. J OSBORN V. CUNNINGHAM. 527 JOHN OSBORN v. ENOCH H. CUNNINGHAM. In the Supreme Court, North Carolina, December, 1839. [Reported in 4 Devereux §• Battle, 423.] Assumpsit for money paid by the plaintiff for the use of the de- fendant, tried at Buncombe, on the last circuit, before his Honor Judge Pearson. The plaintiff read in evidence a note under seal for about $300, signed by the defendant and one Patton as joint obligors; and then proved that, after one-half of the note had been paid, a writ was issued against Patton and the defendant for the balance, and the plaintiff became the bail of Patton in that suit; that judgment was rendered against Patton and the defendant; that Patton left the country, and thereupon proceedings were regularly taken against the plaintiff as his bail ; upon which judgment was rendered against him for $162, which he was compelled by execution to pay. His Honor was of opinion that the plaintiff had not made out a case to entitle him to recover, for that there was not such a privity existing between the plaintiff, as the bail of Patton, and the defendant, as the co-obligor of the latter, as would sustain an action at law for money which he had been compelled to pay as bail. Upon this intimation the plain- tiff submitted to a nonsuit and appealed. No counsel appeared for the plaintiff in this court. Clingman for the defendant. Daniel, J. The plaintiff declared in assumpsit for money paid to the use of the defendant, at his request, and the inquiry is, whether the lq,w would, in a case like this, imply a request. It is set- tled law, that if one pays the debt of another without his request, ex- press or implied, he cannot recover in an action for money paid ; for the supposed debtor may have a good reason to resist the pay- ment of the money. Stokes v. Lewis. 1 The plaintiff became bail only for Patton, at his request, and for his personal benefit. In con- sequence whereof, he has been by process of law compelled to pay the whole debt, for which the creditor had recovered a joint judgment against Patton and the defendant on their joint obligation. Had Patton, merely from his relation of co-obligor, any agency or authority to request the plaintiff to pay the joint debt, so as to subject the defendant to this action for money paid to his use? We can find no authority for such a position. The law will certainly imply a request to pay on behalf of Patton, who was the principal in the bail bond; but not on behalf of the defendant, who was not a privy, but is a mere stranger to that transaction. It seems to us 1 1 T. R. 20, 2 Saund. 264 ; Leigh's N. P. 70. 528 CARTER V. BLACK. [CHAP. III. that the opinion of the judge was correct, and therefore the judgment must be affirmed. Per Curiam. - -^ Judgment affirmed. 1 ^^-^e, "r^-^^zJT ^^r-^^jy^^^y ^v MJTCHELL CARTER v. PLEAS AN£_ BLACK. ^ In the Supreme Court, ITorth CarolTna, DECEMBEjt^lSSD. ^ — ^\2 Tj ?* This was an action of assumpsit, in which the plaintiff declared in • /i^Z^hhe several money counts. Plea, the general issue ; and on the trial at q a Rockingham, on the last circuit, before his Honor Judge Bailey, the jury found the following special verdict, to wit, " that Pendleton Jones ^ -w»^»-^ executed his bond to Thomas Smith, with the defendant, his security, in the town of Madison, in this State, on the 4th of November, 1837, ' v *'' * -^ — payable on the 15th of January, 1838, for the sum of $700 ; that said 00^ -J^) Smith resided in the county of W}'the, Virginia, and took with him the said bond to his residence, and offered the same to the Sheriff of >■ « — V Wythe County, in part satisfaction of two executions which were then in his hands against said Smith, in favor of one Thomas J. Boyd, which the plaintiff refused to receive, without the name of some responsible person who lived in the same count}' ; that the sheriff of Wythe County made known this fact to Carter, the plaintiff, who stated that to accommodate Smith he would join in said paper, as he knew there was no danger — that Black was good ; that the plaintiff then made this indorsement on said bond, to wit: 'This is a good bond, (signed) Mitchell Carter ; ' which bond was then assigned by Smith to Boyd, and received by Boyd in part satisfaction of the executions in his favor. They further find that said bond was lost or destroyed, and that the same was paid by the plaintiff to Boyd under an execution, on the lltb 1 In Bowman v. Blodgett, 2 Met. 308, one who became bail for one partner in a suit against all the partners after dissolution of the firm, and paid the judgment against the parties, was not permitted to recover any indemnity from the co-partners of his principal. In Yoder v. Briggs, 3 Bibb, 228, a joint judgment having been recovered against A and B, one who signed a replevin bond as surety for A, and paid the joint judgment against A and B, was not allowed to maintain assumpsit for money paid against B, who was in fact a surety of A. See also Elmendorph v. Tappen, 5 Johns. 176. In Knox v. Vallandigham, 21 Miss. 527, a judgment was obtained against the prin- cipal and two sureties on a note. One who executed a forthcoming bond as surety for one of the two sureties and paid the judgment, was denied contribution in equity against the other surety. But see contra, Stout v. Vanse, 1 Rob. (Va.) 169. Married woman a surety for her husband. — By statute in certain jurisdictions a married woman may contract with any one except her husband. In these jurisdictions a married woman who becomes surety for her husband cannot, upon paying the creditor, charge the husband upon a contract of indemnity. Major v. Holmes, 124 Mass. 108. But there seems to be no reason why she should not be subrogated to the creditor's light against the husband. — Ed. SECT. II. "I CARTER V. BLACK. 529 of February, 1839, against the plaintiff Carter; and that the plaintiff commenced this suit without calliug on the defendant for payment, or giving him notice thereof. "The jury further find that by the laws of Virginia bonds and notes are negotiable and transferable by indorsement, and that at the time of the indorsement by the plaintiff the defendant was not present, and knew nothing of it; and that there was no express request by the defendant to make such indorsement. His Honor being of opinion, upon this special verdict, that the plain- tiff was not entitled to recover, gave judgment of nonsuit, from which the plaintiff appealed. J. T. Jloreherd, for the plaintiff. No counsel appeared for the defendant in this court. Daniel, J. In the case of Osborne v. Cunningham, decided at this term, we have said that assumpsit for money paid will not lie, where one person pays the debt of another without his request, express or implied. In the case before us, the jury have found that there was no express request. The question then is, will the law imply a request? The counsel for the plaintiff assimilates the case to that of an indorser on a bill of exchange or promissory note, who has paid all and taken up the paper, or who has paid part : he may maintain assumpsit for money paid to the use of the acceptor of the bill or the drawer of the note. Pownall v. Ferrand. 1 The answer to this argument is, that the indorser of a bill or note is considered in law a surety. A bill is an undertaking by the acceptor, and a note by the drawer, to pay the sum named at all events ; and each subsequent party by his indorsement undertakes to pay it upon the default of any prior party. Hence by the nature of these instruments each subsequent party is a surety for ever}* prior one. Theobald on Principal and Surety, 180 ; Fell on Guarantees, 203. But the plaintiff was not a regular indorser, — he was a mere volunteer, or placed his name on the bond only at the instance of the agent of the then holder. As to compulsion of law in paving the debt, it was a compulsion of the plaintiff's own seeking, which arose out of his own voluntary act, and the case is not like Exall v. Partridge, 2 when the monej* was paid by the party under compulsion of law, to redeem his property from a distress not of his own creation. Cumming v. Forrester. 3 The defendant has derived no benefit from the act of the plaintiff ; the bond is not extinguished, and although said to be lost, a court of law cannot take an indemnity from the plaintiff. We think, in this case, the law does not impl}- a request to paj T , and the judgment must be affirmed. Per Curiam. Judgment affirmed.* ^ 1 6 B. & C. 439. 2 8 T. K. 308. 3 1 Maul. & Selw. 494. 4 Teberg v. Swenson,32 Kan. 224 (semble), Accord. Hall v. Smith, 5 How. 96 (semble), Contra. In this case Wayne, J., said, p. 102 : " But suppose such a privity not existing between the parties, the evidence shows it also to be a case of the surety of a surety 34 530 JONES V. OKCHARD. TCHAP. III. JONES v. ORCHARD. In the Common Pleas, June 11, 1855. [Reported in 16 Common Bench Reports, C14.] Jervis, C. J., now delivered the judgment of the Court. 1 The Court desired time to consider one point in this case. It was an action upon certain bills of exchange, with counts for money paid and upon an account stated. A verdict having been found for the plaintiff, a rule was obtained, pursuant to leave reserved at the trial, to enter a verdict for the defendant on the last two counts, and to reduce the damages by the sum of £40, on the ground that no implied indemnity arose out of the transaction giving rise to the action so far as related to those counts, inasmuch as it would be contrary to public policy. We are all of opinion that the rule should be discharged. We are relieved from considering whether, if the recognizance had been estreated for the non-appearance of Orchard, the plaintiff would have had a good cause of action against him upon an implied contract of indemnity, because that question does not occur in this case. The action arises out of these circumstances: Jones became bail for Orchard, who had been indicted at the Central Criminal Court for a conspiracy. The recognizance was conditioned that Orchard should appear in the Court of Queen's Bench on a given day, and plead to the indictment, and at his own proper costs and charges cause and procure the issue or issues that might be joined thereon to be tried, and should appear on the trial, and not depart until he should be discharged by the Court. Orchard did duly appear and plead to the indictment, which was afterwards tried in his ab- sence; and he was convicted. By force of the statute 5 & 6 W. & M. c. 11, s. 3, Orchard and his bail became liable for the costs of the prosecution. The costs were accordingly taxed, but not paid, and thereupon the recognizance was estreated, and Jones was compelled to pay the amount, £40; and he now brings this action upon an implied undertaking on the part of Orchard to indemnify him against the consequences of the obligation entered into by him on his behalf. The rule was moved on the ground that a contract, in a criminal case, to indemnify the bail against the consequences of a default of the principal's appearance on the trial of the indictment, is contrary to public policy, and therefore that the law will not presume any paying the debt of a principal, under a legal obligation, from which the principal wag bound to relieve him. Such a payment is a sufficient consideration to raise an implied assumpsit to repay the "amount, tnougn tne payment was made~w ithout a request f rom the princip al. Tanpin v. Eroster. 1 (J. & P. 112 : Exall v. Partridge. 8 T. R. 310; Child v. Morliss, 8 T. R. 610." See also supra, 445, 447 n. 1. —Ed. 1 Only the opinion of the Court is given. — Ed. SECT. II.] JONES V. ORCHAKD. 531 such contract. It is unnecessary to decide that point on the present occasion, although we are inclined to thiuk the objection well founded, and that such a contract would be contrary to public policy, inasmuch as it would be in effect giving the public the security of one person only, instead of two. 1 But as it is admitted that there is nothing illegal or contrary to public policy in the other alternative, viz., the contract to indemnify the bail against the prosecutor's costs, we need not embarrass ourselves with the consideration of whether or not the law would infer an indemnity as to the rest. An express contract to indemnify against costs would not be illegal ; and conse- quently there can be no reason why the law should not imply an indemnity under the circumstances. It is said that this is an action of contract, and that the contract, 1 Cripps r. Hartnoll, 4 B. & S. 414, 419, 420 (semble) ; Consol. Co. v. Musgrave, 1900, 1 Ch. 37 ; U. S. v. Ryder, 110 U. S. 729 ; U. S. v. Simmous, 47 Fed. R. 575, Accord. Reynolds v. Harral, 2 Strob. 87, Contra. Similarly, a surety on a recognizance in a criminal case has no right of subrogation to the State's right against the criminal for the penalty due. U. S. v. Ryder, 1 10 U. S. 729. On page 736, Bradley, J., speaking for the Court, said : — "The object of bail in civil cases is, either directly or indirectly, to secure the pay- ment of a debt or other civil duty ; whilst the object of bail in criminal cases is to secure the appearance of the principal before the court for the purposes of public jus- tice. Payment by the bail in a civil case discharges the obligation of the principal to his creditor, and is only required to the extent of that obligation, whatever may be the penalty of the bond or recognizance ; whilst payment by the bail of their recognizance in criminal cases, though it discharges the bail, does not discharge the obligation of the principal to appear in court; that obligation still remains, and the principal may at any time be retaken and brought into court. To enable the bail, however, to escape the payment of their recognizance by performing that which the recognizance bound them to do, the government will lend them its aid in every proper way, by process and without process, to seize the person of the principal and compel his appearance. This is the kind of subrogation which exists in criminal cases, namely, subrogation to the means of enforcing the performance of the thing which the recognizance of bail is in- tended to secure the performance of, and not subrogation to the peculiar remedies which the government may have for collecting the penalty; for this would be to aid the bail to get rid of their obligation, and to relieve them from the motives to exert themselves in securing the appearance of the principal. Subrogation to the latter remedies would clearly be against public policy by subverting, as far as it might prove effectual, the very object and purpose of the recognizance. It would be as though the government should say to the bail, ' We will aid you to get the amount of your recog- nizance from the principal so that you may be relieved from your obligation to surren- der him to justice.' If payment of the recognizance operated as a satisfaction or composition of the crime, then the subrogation contended for might be free from this objection ; for then the government would be satisfied in regard to the principal matter intended to be secured." But if one of two sureties in such a recognizance has paid the full amount upon the principal's default, he is not prevented, by considerations of public policy, from recov- ering contribution from his co-surety. Belond v. Guy, 20 Wash. 160. If the defendant in a criminal case has deposited money with his bail to be retained as his indemnity if required, and otherwise to be returned, the transaction being illegal, the money is not recoverable. Herman v. Juechner, 15 Q. B. D. 561 (overruling Wil- son v. Strugnell, 7 Q. B. D. 548). The transaction is equally illegal, although the deposit be made by a third person and not by the defendant himself. Consol. Co. t\ Musgrave, 1900, 1 Ch. 37. — E» 532 JONES V. OKCHAED. [CHAP. III. being void in part, is void altogether. The obvious answer to that argument is this, — if it would be illegal to enter into such a contract as above supposed, the law will not infer that the parties have en- tered into an illegal contract; and, on the other hand, if the contract to indemnify the plaintiff against the payment of costs was legal, and the plaintiff in consequence of entering into the recognizance was obliged to pay these costs, the law will infer a contract to indemnify to that extent. Upon the whole, we are of opinion that there is no illegality in the contract on which the plaintiff relies, and that he is entitled to re- cover. The rule, therefore, will be discharged. Mule discharged. SECT. III.] PETER V. RICH, 533 SECTION III. Contribution. *=JD ;t*_77 ^£e<- WORMLEIGHTON and HUNTER'S CASE. In the Common Pleas, Hilary Term, 1613. j' - \ Reported in Godbult, 243.1 ^ Si t§ Two men are bounden with J. S. as sureties in an obligations^ One — *Tfc»- of the sureties, viz. Wormleighton, was sued upon the bond, and the whole penalty recovered against Lira. He exhibited an English bill into the Court of Requests against the defendant, being the other surety, to have contribution: and it was moved to the Court for a prohibition to the Court of Requests, and the same was granted, because by entering into the obligation it became the debt of each of them jointly and sev- eralby, and the obligee had his election to sue which of them he pleased and take forth execution against him : and the_Court sai d, j hat if one surety should h ave contribution against the other, it would be a great /& % ^&- — cause "of suits, and therefore the pr ohib ition wasja warded ^aiid so it was" ^ satd _ n7was~fately adjudged and granted in the like case, in Sir William VV horwood's caseT ^V C/ FLEETWOOD v. CHARNOCK. In Chancery, before Lord Coventry, 1629. [Reported in Nelson, 10. 1 ] The plaintiff and defendant were jointly bound for a third person, who died leaving no estate ; the plaintiff was sued and paid the debt and brought his bill against the defendant for contribution, who was decreed to pay his proportionate part. 2 tJeM That the i In Chancery , C, 1629. Reported in I Reports in Chahxeru, 34.1 - s Lo Rb Cc plaintiff and'defendant with one Southc became bound to the Lord Russel in two bonds of £1,600 apiece for 1 Tothill, 41, s. c — Ed. 2 " Parkhurst v. Bathurst. Contribution of a bond in Mich, or Hillar, 5 Car. ; Wilcox v. Lord Duusmore. A demurrer put in upon point of contribution overruled 12 Car." Toth. 41. — Ed. ^7 >7 534 PETER V. RICH. [CHAP. IIL paj'iuent of £800, £100 being purchase-money , and the plaintiff an<\ defendant entered into two counter-bonds to the said Southcot for his indemnity, and the first bond of £800 was paid; and the plaintiff and defendants Richard [Rich and?] Sheppard came to account, upon which the plaintiff appeared to have paid all his part of the said purchase- money save £40, for which the plaintiff gave the defendant Rich alone a bond of £80, and thereupon was to be freed by the said defendants of the £800 bond, and was to give over the said purchase wholly unto them ; yet notwithstanding £100 of the said purchase-money being not paid, the plaintiff was compelled to pay the same, being formerly bound with the defendants in the said bond of £1,600, together with £5 interest thereof, which said £105 this Court conceived ought to have been paid by the said Sheppard as the residue of his part of the said purchase- money ; bufthe said Sheppard bein g insolvent, the said £105 i n the opinion orthis Coilr t ought to" be e qually paid and borne by t he plain tiff and defendant Rich, and decreed accordingly. 1 1 Hole v. Harrison, 1 Ch. Ca. 246 ; Dallass v. Walls, 29 L. T. Rep. 599 ; Lowe v. Dixon, 16 Q. B. D. 455, 458 ; Young v. Clark, 2 Ala. 264 ; Burroughs v. Lott, 19 Cal. 125; Williams v. Riehl (California, 1899), 59 Pac. R. 762 (semble); Hyde v. Tracy, 2 Day, 491 ; North v. Brace, 30 Conn. 60, 72 ; Security Co. v. St. Paul Co., 50 Conn. 233 ; Hay den v. Thrasher, 18 Fla. 795, 805 ; Johnson v. Vaughn, 65 111. 425 , Newton v. Pence, 10 Ind. Ap. 672 ; Bosley v. Taylor, 5 Dana, 307 ; Morrison v. Poyntz, 7 Dana, 307 ; Cobb v. Haynes, 8 B. Mon. 137 ; Greene v. Anderson (Kentucky, 1897), 43 S. W. R. 195 ; Swift v. Donahue (Kentucky, 1898), 46 S. W. R. 683 ; Young v. Lyons, 8 Gill, 162 ; Wood v. Leland, 1 Met. 387 ; Cory v. Holmes, 16 Gray, 127 ; Griffin v. Kelleher, 132 Mass. 82, 83 ; Rynearson v. Turner, 52 Mich. 7 ; Stewart v. Goulden, 52 Mich. 143; Dodd v. Winn, 27 Mo. 501, 502, supra, 328, s. c. ; Smith v. Mason, 44 Neb. 610; Vliet v. Wyckoff, 42 N. J. Eq. 642 ; Jones v. Blanton, 6 Ired. Eq. 115 ; McKenna v. George, 2 Rich. Eq. 15 ; Gross v. Davis, 87 Tenn. 226 ; Acers v. Curtis, 68 Tex. 423,425 ; Marsh v. Harrington, 18 Vt. 150 ; Preston v. Preston, 4 Grat. 88, 90; Robertson v. Trigg, 32 Grat. 76; Beckham v. Duncan (Virginia, 1889), 9 S. E. R. 1002; Faurot v. Gates, 86 Wis. 569 ; In re McDonaghs, Ir. R. 10 Eq. 269 ; McKelvey v. Davis, 17 Grant, Ch. 355, Accord. Non-resident co-sureti/. — I n fixing the amount of the contribution in favor of a surety against his fellows, a surety without the jurisdictio n, like an insolvent, is exclud ed, so ^hat the entire burden is divided among those wit hin the jurisdictio n. Security Co. v. StTPauTC'o., 50 Conn. 233"; Bosley v. Taylor, 5 Dana, 157 ; Wood v. Leland, 1 Met. 387 ; Stewart v. Goulden, 52 Mich. 143 ; Boardman v. Page, 11 N. H. 431 ; Currier v. Baker, 51 N. H. 613 ; Jones v. Blanton, 6 Ired. Eq. 115 ; McKenna v. George, 2 Rich. Eq. 15 ; Liddell v. Wiswell, 59 Vt. 365 ; Faurot v. Gates, 86 Wis. 569. Non-re sident co-sureties cannot, and insolvent co-sureties need not, be ma de de- f endants to a bill in equity for contributi on. Burroughs v. Lott, 19 Cal. 125 ; John- son v. Vaughn, 65 HI. 425 ; Jones v. Blanton, 6 Ired. Eq. 115 ; Gross v. Davis, 87 Teun. 226. — En. ^SECT. III.l SWAIN V. WALL. 535 XX« *^>^*- ""77*/ 4 ^-£ ^-^J? -LpZJtey / That the plaintiff and [Reported in L.Re ports in C hanc ery, 149.] defendant and one Jorden, 16 Jac, became jointly bound in a bond of £500 to the City of London for the payment -"J of £300 in February then next, which £300 was employed by one Shad- wel for procuring the place of Serjeant at Arms, which place afterwards * & *>SdA Shadwel assigned to one Hunt for good consideration, which Hunt by y „ £) . direction and agreement of the said Shadwel and the plaintiff and de- ^ J^ fendant Jorden entered into several counter-bonds unto the plaintiff, ^ *<-<*-*•- and Jorden and Wall, for their indemnity from the said bond of £500 entered in to the City of London ; and thereupon it was agr eed, that if ' Hunt failed to pay th e said debt to the city, then the plaintiff and Jor- den and Wall s ho uld pay their res pect ive parts of th e said deBt to the ^d-c*— ~ € city, a nd Hunt died possessed of the said place insolvent, so as the * ——f plaintiffs Jorden and Wall were only liable to pay the said debt ; and the city calling in the said debt, Wall was not able to pay his said share, // '^*"+*A and the plaintiff and Jorden in 1622 took up £300 of one Ducket and — q* ^ r y Bates, and were bound unto them in several obligations for repayment thereof, and therewith paid the said debt to the city, and afterwards Jorden became insolvent, so as the plaintiff, on the behalf of himself and Jorden and Wall, was forced to pay the said £300 to Ducket and Bates, and all interest ; and Wall being afterwards of sufficient estate to pay his ratable part of the £300 and interest paid by the plaintiff as afore- said ; so the bill is, that the defendant Wall may pay to the plaintiff a moiety of the £300 and interest, Jorden being insolvent. The defendant Wall insisted, that the said defendant Wall was not bound in the bonds given to Ducket and Bates, but only in the first bond wherein the plaintiff and Jorden and the defendant Wall were bound, and by the agreement they three were to bear their respective parts of the said £300 in case Hunt failed ; besides, the first bond being delivered up and the debt paid, the defendant conceives himself totally freed thereof. This Court upon hearing the proofs is satisfied that the said defend- ant Wall ought to pay to the plaintiff the third part of the said £300, and did decree the said defendant to pay £100. And as for the damages for the same, forasmuch as the plaintiff both by bill and replication doth only desire a ratable part of the principal money, and the said damages by him paid, which was £300 and damages but for nine months. This Court saw no cause to order more, and so ordered the said £100 and damages only for nine months ; but the plaintiff insisted that there are precedents to enforce the defendant to pay a moiety of the said £300 and damages. The Court ordered precedents to be produced for that purpose. > 536 COWELL V. EDWARDS. [CILVI". III. The plaintiff produced a precedent in 5 Car. I. inter Peter, plaintiff, and Rich and Sheppard, defendants, by which the said defendant Rich, in respect the other defendant Sheppard became insolvent, was ordered to pay the plaintiff Peter, co-surety with the said Rich and Sheppard, a moiet}' of the debt and damages there in question. Mr. Justice Hutton was to consider of this matter. Mr. Justice Hutton thinks fit the defendant shall pay the £100 and £7 10s. for nine months damages, and if the plaintiff hath recovered or received an3'thing towards the said £107 10*. of the counter security before mentioned, he is to allow the same to the defendant. This Court confirmed the judge's order. >Z /y+-«*L. /^0W]§EB, Administrator op COWJJLL, v. EDWARDS. ^*~> ' Indebitatus ASSUMPSiT^br misjjsey paid. ~~ r*~*^ 3 c^c '"^«— «^J -^£*-? John Cowell, the plaintiff's intestate, having entered into a joint ^ -^r^ anc * severa ^ bond with seven other persons, two of whom were prin- ^T cipals and the five others as well as himself sureties, was together n^^ 1 _Q with his co-sureties called upon by the obligees to pay the sum "^engaged for; the defendant and two of the other sureties paid each a part of that sum, but the present plaintiff's intestate paid the resi- due. Upon this the plaintiff, considering the defendant and one of the two sureties who had already contributed as the only solvenf ' Q sureties, called upon them to pay their proportion, and now brough /^ C **«L this action to recover from the defendant such a sum of money as, £>> N . when added to what had been already paid by him, would make up one-third of the whole sum paid to the obligees, deducting only * >j~JZ- ^Z*<- ^DA^IES^EVAN WOmwS^f^ c ^ sU f r-~-v In the |^chequer,Hilab& Term, IMO. ( 7 ^f (y*~^ 5\ s^n epo neft in 6 1/^yff?- WjJfhu 153.] /7~' /i " ^ Parke£/B. 2 In these cases actions wwe brought by/tjre plaintiff, - one of the makers of a joint and several promfssoiy note, dated the'^**? -*-** 27th of December, 1827, for the sum of £300, with interest, to recover -*J^C£. '"'*<- from the two other makers, Evan Humphreys and John Humphrej's, a \ r 'a -*%*+ part of the money paid by him to the payee, he having paid the whole. ^O) -*"*-t^ In the action against Evan Humphreys, the plaintiff claimed the whole, alleging that the defendant was the principal debtor. Against the e ^-~E~*^~™ defendant John Humphreys, he claimed a moiety of what he had paid, alleging that the defendant was a co-surety. There were two pleas, — • non assumpsit, and the Statute of Limitations ; and on the trial at the Spring Assizes, before my Brother Coleridge, it appeared that the plaintiff had paid the whole of the debt and interest, of which the sum of £30 only was paid within six years before the commencement of the suit, the residue having been discharged before. For this sura the plaintiff recovered against Evan Humphre}'s, leave being reserved by the learned judge to move to increase the amount to the whole sum paid ; against John Humphreys, the plaintiff recovered a moiety of £30, and permission was also given to move to increase that verdict. The rule for increasing the amount of the verdict against Evan MB.&C. 444 2 7 B. & C. 444. Only a portion of the opinion of the Court is giv en. — Ed. #*i 542 DAVIES V. HUMPHREYS. [CHAP. III. Humphreys, the principal, must be discharged ; fo r it i s c lear that each sum the pla intiff, th e surety, paid, w as paid in ease of th e principal, and ought t o have been p aid in the first ms tanc e_by him, a n d that~t"K e plaintiff ha d a right of action a gainst him the in stant he paid it, for so much ruone}' paid to his use. Howe ver convenient it"lnightl3e~Io~lim it the number of actions in respect of one suretyship, there is no rule o f law w hich requires the surety to pay the whole debt before he can ca ll for reimbursement. The consequence is, that the plaintiff's right of action against the principal must be limited to the full amount of all the payments within six 3 - ears, and this being the amount for which the verdict was taken, the rule to enter a verdict for a larger sum must be discharged. Against the co-surety the case is different — the Court will give it further consideration. And now, in this term, the judgment of the Court, on the remaining point in the action against John Humphreys, the surety, was delivered by Parke, B. A rule granted in this case, as well as one which was granted in another action on the same note against the principal, was argued in the sittings after Trinity Term. In the course of the last term, the Court disposed of the rule in the latter action, and one of the questions in this ; h aving reserved for further consideratio n the question, at what time the right of one co-surety to sue the other for contrib ution aris es. This right is founded not originally upon contract, but upon a princi- ple of equity, though it is now established to be the foundation of an action, as appears by the cases of Cowell v. Edwards and Craythorne v. Swinburne ; though Lord Eldon has, and not without reason, inti- mated some regret that the courts of law have assumed a jurisdiction on this subject, on account of the difficulties in doing full justice be- tween the pai'ties. What, then, is the nature of the equity upon which the right of action depends? Is it that when one surety has paid any part of the debt, he shall have a right to call on his co-surety or co- sureties to bear a proportion of the burthen, or that, when he has paid more than his shai-e, he shall have a right to be reimbursed whatever he has paid beyond it? or must the whole of the debt be paid by him or some one liable, before he has a right to sue for contribution at all? We are not without authority on this subject, and it is in favor of the second of these propositions. Lord Eldon, in the case of Ex parte Gifford, states, that sureties stand with regard to each other in a relation which gives rise to this right amongst others, that if one pa ys more than his pro])ortion, there sh all be a contribution for a pro por- tion of the excess beyond the pr oportion which, in all events, he is to pay ; ana he e xpressly says, " that unless one surety should p a}- more tlian his moiety, he would not pay e noug h to bring an assumpsit against the ot her," And this appears to us to be very reasonable ; for, if "a surety pays a part of the debt only, and less than his moiety, he can- not be entitled to call on his co-surety, who might himself subsequently SECT. III.] DAVIES V. HUMPHREYS. 543 pay an equal or greater portion of the debt : in the former of which eases, such co-surety would have no contribution to pay, and in the latter he would have one to receive. In truth, therefore, until the one has paid more than his proportion, either of the whole debt, or of that part of the debt which remains unpaid by the principal, it is not clear that he ever will be entitled to demand anything from the other ; and before that, he has no equity to receive a contribution, and consequently no right of action, which is founded on the equity to receive it. Thus, i f the surety, more than six years before the action, h ave paid a por- ti on of the cteot, and the principal has paid the residue within six yea r s , the Statute of Limita tions will not run from the payment by th e su rety , but from the paym ent of the residue by the principal, for until the l atter date it does not appear that the surety has paid more than h is share. The practical advantage of the rule above stated is consider- able, as it would tend to multiplicity of suits, and to a great inconven- ience, if each surety might sue all the others for a ratable proportion of what he had paid, the instant he had paid any part of the debt. But, whenever it appears that one has paid more than his proportion of what the sureties can ever be called upon to pay, then, and not till then, it is also clear that such part ought to be repaid by the others, and the action will lie for it. It might, indeed, be more convenient to require that the whole amount should be settled before the sureties should be permitted to call upon each other, in order to prevent multi- plicity of suits ; indeed, convenience seems to require that courts of equity alone should deal with the subject ; but the right of action hav- ing been once established, it seems clear that when a surety has paid more than his share, every such payment ought to be reimbursed by those who have not paid theirs, in order to place him on the same footing. If we adopt this rule, the result will be, that here, the whole of what the plaintiff has paid within six years will be recoverable against the defendant, as the plaintiff had paid more than his moiety in the year 1831 ; and consequently the rule must be absolute to in- crease the amount of the verdict from £15 to £30. Rules accordingly. 1 1 Ex parte, Snowdon. 17 Ch. D. 44; Preslar v. Stallworth, 37 Ala. 402, 405; Sher- wood v. Dunbar, 6 Cat. 53 ; Richter v. Henniug, 110 Cal. 530; Lytle v. Pope, 11 B. Mon. 297,307; Rooinson v. Jennings, 7 Bush, 630; Hooper v. Hooper, 81 Md. 155, 174; Pass v. Grenada 71 Miss. 426 ; Singleton v. Townsend, 45 Mo. 379 ; Magruder v. Admire, 4 Mo. Ap. 133 : Sherwood v. Woodard, 4 Dev. 360 ; Leek v. Covington, 99 N. Ca. 559 ; Durkin v. Kuney, 19 Dreg. 71 ; Mateer v. Cockrill (Texas Civ. Ap. 1898), 45 S. W. R. 751 ; Bushnell v. Bushnell, 77 Wis. 435, Accord. . T he suret y's right to contr ibution is complete upon paym ent (without notice to the^ co-surety of~the payment or demand of repayment/ of the con tributive share. Taylor^- v. Reynolds, 53 Cal. 686; Ward v. Henry, 5 Conn. 595 ; Wood v. Perry, y lowa, 479 ; Morrison v. Poyntz, 7 Dana, 307; Chaffee v. Jones, 19 Pick. 260; Vliet v. Wyckoff, 42 N. J. Eq. 644 ; Sherrod v. Woodard, 4 Dev. 360 ; Parham v. Green, 64 N. Ca. 436 ; Bright v. Lennon, 83 N. Ca. 133; Cage v. Foster, 5 Yerg. 261 (principal being insol- vent); Poster v. Johnson, 5 Vt. 60; Mason v. Pierson, 69 Wis. 585, Accord. Williams ?•. Williams, 5 Oh. 444 ; Carpenter v. Kelley, 9 Oh. 106 ; Neilson v. Fry, 16 Oh. St. 552, Contra.— Ed. 544 ^ DEEKING V. EARL O F WI NCHELSEA. _£CH^P. \W SIR E. DEERING K THE EARL OF WINCHELSEA £^T s^2e feoffamento ; " these are founded on the Statute of Marlebridge, 52 H. III., c. 9, which enacts, "That if any inheritance whereof but one suit is due descends unto many heirs as unto parceners, whoso hath the eldest part of the inheritance, shall do that one suit for himself and fellows, and the other co-heirs shall be contributaries according to their portion for doing such suit. And if many feoffees be seised of an inheritance whereof but one suit is due, the lord of the fee shall have but that one suit, and shall not exact of the said inheri- tance but that one suit, as has been used to be done before. And if these feoffees have no warrant or means which ought to acquit them, then all the feoffees according to their portion shall be contributaries for doing the suit for them." The object of the statute was to protect 35 546 DEERING V. EARL OF WINCHELSEA. [CHAP. III. the inheritance for more than one suit. The provision for contribu- tion was an application of a principle of justice. In Fitzh. N. B. 162 B, there is a writ of contribution where there are tenants in common of a mill and one of them will not repair the mill, the other shall have the writ to compel him to contribute to the repair. In the same page Fitzherbert takes notice of the writs of contribution between co-heirs and co- feoffees; and supposes that between feoffees the writ cannot be had without the agreement of all, and the writ in the register countenances the idea; yet this seems contrary to the express provision in the statute. In Sir Win. Harbet's Case 1 many cases are put of contribution at common law. The reason is, they are all in cequali jure, and as the law requires equality they shall equally bear the burden. This is considered as founded in equity: contract is not mentioned. The principle operates more clearly in a court of equity than at law. At law the party is driven to an idita querela or scire facias to defeat the execution and compel execution to be taken against all. There are more cases of contri- bution in equity than at law. In Equity Cases Abridged there is a string under the title "Contribution and Average." Another case at law occurred in looking into Hargrave's Tracts in a treatise ascribed to Lord Hale on the prisage of wines. The king's title is to one ton before the mast and one ton behind the mast. If there are different owners they may be compelled in the Exchequer Chamber to con- tribute. Contribution was considered as following the accident on a general principle of equity in the court in which we are now sitting. In the particular case of sureties, it is admitted that one surety may compel another to contribute to the debt for which they are jointly bound. On what principle? Can it be because they are jointly bound?.- What if they are jointly an$ severally bound? What if severally bound by the same or different instruments? In every o ne of th ose cases sureties have a common interest and a"common burthen. They are bound as _ effect ually quoa d contribution, as if bound In one instr ument , with this difference only, that t he sums in e ach instrument ascertain the proportions, whereas if__ they wer j^all joined in the same engagement they must all contribute equally . In this case Sir E. Deering, Lord Winchelsea, and Sir J. Rous were all bound that Thomas Deering should account. At law all the bonds are forfeited. The balance due might have been so large as to take in all the bonds; but here the balance happens to be less than the penalty of one. Which ought to pay? He on whom the crown calls must pay to the crown; but as between themselves they are in cequali jure, and shall contribute. This principle is carried a great way in the case of three or more sureties in a joint obligation; one being insolvent, the third is obliged to contribute a full moiety. This circumstance and the possibility of being made liable to the whole has probably produced several bonds. But this does not i 3 Co. 1 1 6. /rt) 66jf»^~f zzz SETTT. m.T ' BELLS ADMINISTRATOR^ V. JASPER. touch the principle of contribution whe re al l are bound as sureties fo r the same person. " There is an instance in the civil law of average, where part of a cargo is thrown overboard to save the vessel. Show. Pari. Cas. 19 Moor, 297. The maxim applied is qui sentit commodum sentire debet' et onus. In the case of average there is no contract express or implied, nor any privity in an ordinary sense. This shows that contr ibution is founded on equality, and established by the law of all n a tious . T here is no difficulty i n as certaining the proportions in whi ch the parties ought to contribute. The penalties of the bonds ascertain the p roportion s. ' The decree pronounced was, that it being admitted by the Attorney- General and all parties that the balance due was £3,883 14s. 8%d., the plaintiff Sir E. Deering, and the defendants the Earl of Winchelsea and Sir J. Rous, ought to contribute in equal shares to the payment thereof, and that they do accordingly pay each £1,294 lis. 6\d., and on payment the Attorney-General to acknowledge satisfaction on the record of the judgment against the plaintiff, and the two bonds entered into by the Earl of Winchelsea and Sir J. Rous to be deliv- ered up. This being a case which the Court considered as not favorable to Sir E. Deering and a case of difficulty, they did not think fit to give him costs. 1 <^ «. STRATOR Vr-J. B. JASPER and Others. ~_ Court, Nort h C arolina, June, 1843. ^ Z*5r o [Reported in 2 IredelL Equit*. 597.] In the A. diLIjIj o ~n the S Daniel, J. 2 ^U-Q +~L year 1 ST?,. John B. Jasper was appointed guard- "77 ian to Patsey Jasper by the County Court^of Hyde, and he executed a %. 1 WnTWng v. Burke, 6 Ch. 342, 10 Eq. 539 ; In re Ennis, 1893, 3 Ch. 238; Dugger ^r i Ark. 232 ; Powell v. Powell, 48 Cal. 234 ; Bosley v. Taylor, 5 Dana, 157 ; Cobb v. Haynes, 8 B. Mon. 137; Elbert v. Jacobey, 8 Bush, 542 ; Ketler v. Thompson, 13 Bush, 287 ; Bergen v. Stewart, 28 How. Pr. 6 ; Hughes v. Boone, 81 N. Ca. 204 ; Pickens v. Miller, 83 N. Ca. 543 ; Harris v. Ferguson, 2 Bail. 397 ; Bentley v. Harris, 2 Grat. 357 ; Rudolf v. Malone (Wisconsin, 1894), 80 N. W. R. 743. It has been held that, if a principal has given a bond with sureties, and subsequently has executed a second bond for a smaller amount with different sureties, covering a part of the duty embraced in the first bond, the sureties on the two bonds will share the burden equally, unless the creditor's claim exceeds twice the amount of the smaller bond, the sureties in the larger hond being liable for all the excess beyond this amount. Burnett v. Millsaps, 59 Miss. 333; Cherry v. Wilson, 78 N. Ca. 164, 166; Odom v. Owen, 58 Tenn. 446 (semble).— Ed. 1 Only the opinion of the Court is given. — Ed. ^ &1 550 McBKIDE V. POTTER-LOVELL CO. [CHAP. IIL less its commissions for selling the same. The Potter-Lovell Company also held notes of others of the defendants, which it had received from them for sale. Instead of selling the above-mentioned notes for the benefit of the several makers, the company at different times wrongfully and fraudulently pledged all of them to the Second National Bank as security for its own debts to said bank, all the notes being pledged for the same debts. The bank, being a bona fide holder for value without notice, collected enough of these notes from time to time as they fell due, including the notes of the plaintiffs and some others, to satisfy its claims against the Potter-Lovell Company. All of the various parties whose notes were thus fraudulently pledged stood on the same footing, except that the notes were pledged at different times, and fell due and were collected at different times ; and except that one of the parties, the North Star Boot and Shoe Company, demanded the return of its note from the Potter-Lovell Company before the same was pledged, and has never paid the same in whole or in part to the bank. These differences do not vary the equitable rights and liabilities of the parties as amongst themselves. The liability to contribute does not depend on a contract between the parties who are held liable to contribute, and is not affected b} T the fact that notes were pledged and fell due and were paid at different times, or that some of them were paid only in part, or not at all. The notes were all pledged to secure the same indebtedness. The fact that some of them fell due at earlier dates than others creates no equit} T in favor of those which fell due last. See American Loan & Trust Co. v. Northwestern Guarant}' Loan Co. 1 T he various parties selected a common agent, and this agent used its power to plac e them all under a common liability, thus virtually ma king them all suretie s for itsel f. It might be that under such circumstances the pledgee would prefer to hold one and exonerate another, and it would have power to do so in the first instance by proceeding to collect of one, but not of another. B ut where several different parties hav e thus been exposed to loss by the fra ud of their common agent, it is more equit able tliat the burden of the loss should be shared pro ra ta. Under such circumstances equality is equity, without respect to the time of the maturity of the notes. The demand by the North Star Boot and Shoe Compan}' for the return of its note was also immaterial. It was no more fraudulent to pledge this note after such demand than it would have been to pledge it before a demand. All the notes being pledge d as security for the same indebtedness, the whole loss in conseque nce t hereof is to be borne by all the makers in proportion to the amounts of the notes so pledg ed. Gould v. Central Trust Co. ; 2 New England Trust Co. v. New York Belting & Packing Co. ; 3 Wiggin v. Suffolk Ins. Co.; 4 Warner v. Morrison. Decree for the plaintiff s. 5 i 166 Mass. 337. 2 6 Abb. N. C. 381. 3 166 Mass. 42, and cases there cited. 4 18 Pick. 145, 153. 5 T he doctrine of the principal case applies equally although the co-suretyship cre- ated against the will of the parties be real and not personal, as in Gould v. Central SECT. III.] COOPE V. TWYNAM. 551 COOPE v. TWYNAM. In Chancery, before Lord Eldon, C, December 3, 1823. [Reported in Turner §• Russell, 426.] The bill in this cause, amongst other things, pra} T ed, that a bond, which had been executed by the plaintiff and John Brice deceased, for securing to the defendant Twjnam the sum of £400, and interest, pay- able on the 24th of December, 1814, might be delivered up to be can- celled, and for an injunction in the mean time to restrain proceedings at law upon the bond. The principal case stated by the bill in support of the relief prayed respecting the bond was, that in August, 1812, the plaintiff and William Rogers and William Purdue Smith respectively agreed to become secu- rity with the said John Brice for the payment to the defendant Twynam of such sum of money, not exceeding £1,200, as Brice might be found indebted to Twynam upon the settlement of an account then depending between them ; that it was agreed that such security of the plaintiff and Rogers and Smith respectively should be given by three several bonds pa}able, with interest, at different periods, that is to sa}-, one bond from Brice, and Smith as his surety, for the payment of £400, and in- terest, on the 24th of December, 1813 ; another bond from Brice, and the plaintiff as his suretj*, for the payment of £400, and interest, on the 24th of Decembei', 1814 ; and another bond from Brice, and Rogers as his surety, for the payment of £400, and interest, on the 24th of Decem- ber, 1815 ; that Brice and Twynam accordingly caused three several bouds to the effect aforesaid to be prepared, and that the plaintiff and Rogers respectively executed the bonds in which the}- were respectively named as sureties, but that Smith declined to execute the bond in which he was named as suret}-, or to cany the agreement with Twynam into effect. The bill charged, that the execution of the bonds was one entire agreement, and that as Smith did not execute the bond in which he was named as suret}*, the plaintiff was not bound b}' the bond which he had executed ; and it further charged, that the bond executed by the plain- tiff was executed b} T him upon the faith and expectation that Smith would execute his bond, and that Brice would thereby be relieved from Trust Co., 6 Abb. N. C. 381, in which ease the subject-matter of the pledge was not_as i n the principal case the obligat ions, but the p roperties of diff erent persons. Contribution in cases of Double Insurance. — "A double insurance, tliough it be made with a view to a double satisfaction in case of loss, and is therefore in nature of a wager, is not void by the law of England. The two policies are considered as making but one insurance. They are good to the extent of the value of the effects put in risk. But the insured shall not be permitted to recover a double satisfaction. He may sue the underwriters on both the policies, but be can only recover the real amount of Bis loss, to wnicli all the underwriters shall contribute in proportion to their several sub- scriptions.' 1 Marsh. Ins. (1st ed .] 115. See also 1 Arnould, Ins. "328, 329. — Ed- ~~ 552 COOPE V. TWYNAM. [CHAP. III. the payment of the £1,200 to Twynam until the bonds should respec- tively become payable. The defendant Twynam, by his answer, said that in August, 1812, Brice was indebted to him in the sum of £1,364, or thereabouts, upon the balance of an account which was then depending between them, and that being pressed for payment of the balance, Brice proposed to give security for £1,200, part thereof, and offered as such security the three several bonds mentioned in the bill. He further said, he believed that the plaintiff and Rogers, each of them alone and separately from the other, agreed to become bound with Brice for the payment of £400 to him, the defendant, without any reference to the settlement of accounts between him and Brice, and without the plaintiff and Rogers becoming sureties or liable for the default of each other, or of Smith ; and he said he believed, that for the purpose of giving the aforesaid security 7 , the plaintiff, for himself alone, and without any privity or connection with Rogers or Smith, agreed to join Brice in a bond for the payment of £400 and interest on the 24th of December, 1814 ; and Rogers, in like manner, agreed to join Brice in a bond for the payment of £400 and interest upon the 24th of December, 1815 ; but he said he did not be- lieve that Smith ever agreed to join Brice in a bond for the pa3 T ment of £400 and interest on the 24th of December, 1813, although, at the time when the other bonds were executed, Brice had induced him to believe that Smith would execute such a bond. He admitted that the three bonds were prepared by his solicitor (who, he said, acted on that occa- sion as the solicitor of Brice), and that the plaintiff and Rogers respec- tively joined with Brice in the bonds in which they were named as co-obligors with him ; and that Smith declined on his part to execute the bond in which he was named as co-obligor with Brice, and he in- sisted that, notwithstanding Smith did not execute that bond, the plain* tiff was bound by the bond which had been executed by him. He denied that the execution of the bonds was one entire agreement, and said that he did not believe that the plaintiff executed the bond in which he had joined, upon the faith and expectation that Smith would execute the other bond, and that Brice would thereby be relieved from the payment of the £1,200 until the bonds should respectively become paj'able. Mr. Hart and Mr. Koe moved for the injunction upon the merits confessed by the answer, and in support of the motion argued, that if the arrangement had been that Brice should give a bond for £1,200, with three sureties, and one of the sureties had declined to execute the bond, neither of the others would have been liable. That the same principle which applied to the case of an arrangement for three sureties joining the principal debtor in one bond, must apply to the case of an ai'rangement for three sureties joining the principal debtor in several bonds. That in each instance it was merely the case of three persons Agreeing to become sureties for the principal debtor, and two only becoming such sureties. They cited Deering v. Lord Winchelsea and Underbill v. Horwood. 1 1 10 Ves. 209. SECT. III.] DAVIS V. EMERSON. 553 Mr. Sugden and Mr. Homilly for the defendant, relied upon the fact of the sureties having entered into several and distinct obligations as an answer to the motion. The Lord Chancellor. These cases of sureties depend upon nice distinctions in point of fact. Deering v. Lord Winchelsea settled, that if three persons became sureties for £12,000, each in a separate bond for £4,000, there would be a right of contribution between them. That case was much doubted in Westminster Hall at the time it was decided ; but I believe, upon con- sideration, it will be found to be quite right. In that case it was said by the sureties, we will each give a bond for £4,000, but beyond that we will not be liable ; it was held, however, that there was a liability between them as co-sureties. The present case depends upon the ques- tion, whether this was really a separate and distinct transaction, or the same transaction split into different parts. If the case of Deering v. Lord Winchelsea be right, and there was an agreement that A, B, and C should become liable for £1,200, each in a bond for £400, there would be a right of contribution between them ; and then it would be a question whether, if the bonds were not given by all, they would be obligatory upon any. That would depend upon nice distinctions. It might be waived by subsequent transactions. The Lord Chancellor said, that he considered the bonds in this case as distinct obligations, and that it was impossible to appby the doctrine in Deering v. Lord Winchelsea. Injunction refused. 1 JOHN M. DAVIS v. JOSEPH EMERSON. In the Supreme Judicial Court, Maine, April Term, 1840. [Reported in 1 7 Maine Reports, 64.] Assumpsit for money paid, laid out, and expended. The plaintiff and defendant had been sureties for one Chadbourne, and a suit had been brought against them, and judgment obtained against the three. This execution had been paid by the plaintiff, Chadbourne being in- solvent ; and he now claimed to recover one-half the amount of execu- tion, debt, and costs. The defendant objected to the allowance of any part of the costs. 2 1 Pendlebury v. Walker, 4 Y. & C. 424. —Accord. Similarly, a once-existing right of contribution may be renounced by a subsequent agreement. Moore v. Isley, 2 Dev. & B. Eq. 372 ; see also Curtis v. Parks, 55 Cal. 106 ; or the measure of contribution may be determined by a special agreement : Rose v Wollenborg (Oregon, 1899), 59 Pac. R. 190 (semble). — Ed. 2 The statement is slightly abridged. — Ed. 554 HITCHMAN V. STEWART. [CHAP. III. Weston, C. J. A judgment was recovered against the plaintiff and the defendant, for which both were jointly and equally liable. The failure to pay, which occasioned the costs, was imputable to the de- fendant as much as to the plaintiff. The plaintiff paid the execution, including the costs. As the defendant was liable for half the execu- tion, to that extent the plaintiff paid money for his use and benefit. The costs cannot be distinguished from the debt. Eveiy equitable principle which entitles the plaintiff to contribution for the one applies equally to the other. Judgment on the verdict} HITCHMAN v. STEWART. In Chancery, before Sir R. T. Kindersley, V. C, May 29, 1855. [Reported in 3 Drewry, 271.] The bill was filed in this case by Joseph Hitchman, against John Stewart, Frederick Priest, Alfred Suter, William Green, William John- son, and Frederick Green. The plaintiff was, together with W. Johnson, F. Green, A. Suter, and Fann} r Stewart, deceased, whose representatives were the defend- ants Stewart and Priest, one of the sureties of W. Green, for securing his due performance of his duty as a collector of taxes. W. Green, the principal debtor, failed in the performance of the obligations, and the sureties became liable, and the plaintiff was called upon to pay, and did pay, the amount due from hira. The bill was filed to have contribution against the representatives of F. Stewart and against A. Suter only, alleging that W. Green, W. John- son, and F. Green were insolvent. The answer of Stewart and Suter suggested that they were not insolvent, and required that they should be made parties, and they were made parties. It subsequently turned out that the allegations of the bill were so far correct that W. Green, the principal debtor, and F. Green were insolvent, and the certificate of the chief clerk on the inquiries directed found that W. Johnson was not able to pay anything except his own 1 Kemp v. Einden, 12 M. & W. 421 ; Security Co. v. St. Paul Co., 50 Conn. 233; Bosley v. Taylor, 5 Dana, 157; Newcomb v. Gibson, 127 Mass. 396; Boardman v. Paige, 11 N. H. 431 (sernble) ; Stothoff v. Dunbam, 4 Harr. (N. J.) 181, 185 (semble); Bright v. Lennon, 83 N. Ca. 183; Van Winkle v. Johnson, 1] Oreg. 469; McKenna v. George, 2 Rich. Eq. 15; Gross v. Davis, 87 Tenn. 226; Foster v. Johnson, 5 Vt. 60; Marsh v. Harrington, 18 Vt. 150; Harper v. Knowlson, 2 Up. Can. E. & A. 253, Accord. Counsel Fees. — The rule is the same as to counsel fees. Wagenseller v. Pretty- man, 7 111. Ap. 192; Van Winkle v. Johnson, 11 Oreg. 469; McKenna v. George, 2 Rich. Eq. 15; Gross v. Davis, 87 Tenn. 226; Marsh v. Harrington, 18 Vt. 150; Fletcher v. Jackson, 23 Vt. 581. — Ed. SECT. III.] HITCHMAN V. STEWART. 555 costs and £40. The defendants Stewart, Priest, and Suter had dis- puted the right of the plaintiff altogether, on which point the decision of the Court was against them; and the only questions now to be de- termined on further directions were, whether the plaintiff was entitled to interest, which he claimed, at £4 per cent on the moneys paid by him, from those of the co-sureties who could refund their shares ; and how the costs, particularly of the insolvent co-sureties who were before the Court, were to be dealt with ? 1 The Vice-Chancellor. The two questions in this case are, as to the right of the plaintiff to interest ; and as to the costs. Now, the case of Lawson v. Wright 2 appears to me to be in point on both ques- tions ; that is, precisely in point on the question of interest, and it bears on the question of costs. First, as to the question of interest, — the plaintiff has paid, under his liability as surety", a sum of £800 ; there is no question but that he is entitled to contribution from each of the other four sureties, one-fifth of the amount paid, that is, if all were able to pa}'. But F. Green is quite unable. Therefore, the plaintiff has a right to recover from each of the other three one-fourth of the sum paid by him ; then is he en- titled not only to the principal, but to interest from the time when the payment was made? The case of Peter v. Rich does not appear to me to apply : it only decides that when a suret}' makes a pa}-ment, part of which consists of principal and part of interest, he is entitled to recover all that he has paid. Petre v. Duncombe, in the second volume of Lowndes, Maxwell, and Pollock's Practice Cases, 3 is to a certain extent in point ; but in that case there was an actual indemnity given by the defendant to the plain- tiff ; and there it was held that the indemnit}' carried with it interest. Here there is no actual indemnity ; but Lawson v. Wright appears to me to be on this point on all-fours with this case. Now that decision appears to me to be in the interests of justice, and I find no decision against it. It appears to me that it is just that when several persons concur in being sureties for a principal debtor, whatever view a court of law may take, on which I give no opinion, a court of equity will take this view, that there is among them all an implied agreement to indem- nif}' each other ; each agrees that, as among them, he will bear his aliquot part of the debt, and on that principle it is, I think, that Lawson v. Wright must have been decided. Finding that decision, and finding it founded on what T think a sound equity, and no decision against it, I cannot do better than to follow it ; and I am of opinion, therefore, that the plaintiff is entitled to interest on what he has paid. 4 1 The arguments of counsel are omitted. — Ed. 2 1 Cox, 275. 3 20 L. J. Q. B. 242, s. c — Ed. * Lawson v. Wright, 1 Cox, 275 ; Ex parte Bishop, 15 Ch. Div. 400; In re Watson, 1896, 1 Ch. 925 (Bell v. Free, 1 Sw. 90, contra, is no longer law) ; In re Swan, Ir. R. 4 Eq. 209 (overruling Onge v. Truelock, 2 Moll. 42, and Salkeld v. Abbott, Hayes <§ Jones, 110) ; Buckmaster v. Grundy, 8 111. 626; Moore v. Bruner, 31 111. Ap. 400 Breckinridge v. Taylor, 5 Dana, 110; Bosley v. Taylor, 5 Dana, 157; Titcomb v 656 HITCHMAN V. STEWART. [CHAP. IIL On the question of costs, — so far as the costs have been occasioned by the contention of the representatives of Mrs. Stewart against the claim of the plaintiff altogether, the plaintiff must have those costs. Then as to the general costs of the suit ultra those costs : this is a case not like Lawson v. Wright, where there were only two sureties, each solvent ; here there were five of them, sureties, and some of them turn out to be insolvent. It appears to me that this is a case in which it would have been impossible to find out what each surety was liable to pa}', without coming into equity. This is a case in which the plaintiff, on the one hand, is obliged to come into equity to ascertain what is due from each, and, on the other hand, the defendants could not have their liabilities determined without inquiry ; and, therefore, as to that part of the costs of the suit, neither defendant nor plaintiff ought to have costs, but each part}' must bear his own. Therefore the plaintiff and the representatives of Stewart and Suter will pa}- their own costs. As to F. Green, one of the co-sureties, an offer was made at the hearing to have an inquiry whether he was able to pay, and that was declined; I must assume, then, that he was altogether insolvent; and then the question is, whether he has now a right to say he ought not to be brought here, that it was unnecessary and improper that he should be brought here, and that the plaintiff must pay his costs. Now it appears to me impossible to say that is so with regard to a party liable to pay one-fifth; he cannot be allowed to say, "I cannot pay anything, and therefore you had no business to bring me here, or to trouble me." All I can do is to make him pay costs ; but I will not give him costs ; he must pay his own costs. Then as to W. Green, his case is even stronger than that of F. Green ; he clearly was not an improper party ; the plaintiff might, it is true, have dispensed with him, but then he must have proved his insolvency in the cause. 1 His Honor again referred to Lawson v. Wright on this point, observ- ing that that case was, as to the principal debtor, on all-fours with the present case. McAllister, 81 Me. 399; Smithy. Mason, 44 Neb. 610; Campbells. Mesier, 6 Johns. Ch. 21.; Burrows v. McWhann, 1 Desauss. 409, 424; Aikin v. Peay, 5 Strob. 15; Sherwood v. Jordan, 2 Tex. Unrep. Cas. 610, Accord. The surety is, of course, to be reimbursed for interest paid by him as well as for principal. But in Hawkins v. Maltby, 6 Eq. 505, 4 Ch. 200, one who had paid 1 1 per cent interest was allowed to recover only the legal rate from the one primarily liable, because his paymeut of the higher rate was due to his own default. But why should the principal, who was in default to the surety as well as to the creditor, profit at the expense of the surety 1 See a similar criticism in Rowlatt; Pr. & Sur. 185. — Ed. 1 In a proceeding in equity for contribution the plaintiff must join the priiiciji.il as defendant, if within the jurisdiction, or else prove his insolvency. Lawson v. Wright, 1 Cox, Eq. 275; Chrisman v. Jones, 34 Ark. 73; Sloo v. Pool, 15 111. 47 (semble) ; Johnson v. Vaughan, 65 111. 425 ; Daniel v. Ballard, 2 Dana, 296 ; Byers v. McClana- han, 6 Gill & J. 250 ; Stone v. Buckner, 20 Miss. 73 ; Rainey v. Yarborough, 2 Ired. Eq. 249; Allen v. Wood, 3 Ired. Eq. 386; Fischer v. Gaither, 32 Oreg. 161 ; Grose v. Davis, 87 Tenn. 226, 230 (semble) ; McCormack v. O'Bannon, 3 Munf. 484. He must also join all solvent co-sureties within the jurisdiction. Johnson v. Vaughan, 65 111. 425; Byers v. McClanahan, 6 Gill & J. 250; Young v. Lyons, 8 Gill, 162; SECT. III. I TOBIAS V. KOGEKS. 657 TOBIAS v. ROGERS. In the Court of Appeals, September, 1855. [Reported in 13 New York Reports, 59.] Gardiner, C. J. 1 The plaintiff and defendant were sureties in a replevin bond for Mahoney and Trull, conditioned, among other things, for the payment to the defendants in the replevin suit "of all such sums as might by them be recovered against Mahoney and Trull in that suit." The bond was executed in 1837. Rogers, the defendant in this suit, presented his petition in 1842, and obtained his discharge in 1843. The discharge operated upon " all debts, contracts, and other engagements of the bankrupt, provable under the act." The 5th sec- tion of the bankrupt act provides "that all persons having uncertain or contingent demands against such bankrupt shall have a right to come in and prove such debts or claims, and shall have a right when their debts and claims become absolute to have the same allowed to them." Ten j-ears after the execution of the bond, and five after the presentation by Rogers of his petition, the defendants in the replevin suit recovered judgment against Mahoney and Trull for over $1,300, which Tobias, the plaintiff in this action, was compelled to pa}' ; and he now brings this suit against Rogers, his co-surety in the replevin bond, for contribution. The effect of the discharge was to exonerate Rogers from his obliga- tion incurred to the defendants in the replevin suit, by his execution of the bond in their favor, as one of the sureties of Mahoney and Trull. His liability as a co-obligor with the plaintiff was extinguished by ope- ration of law ; and from that moment he ceased to be co-suret}' with him for a common liability or a common principal. Now if the right to contribution results from a general principle of equity, that sureties in cequali jure must bear the common burden equally, and that it will be enforced whenever they are bound for a principal debtor in relation to one and the same transaction, as determined by the Supreme Court in Norton v. Coons, 2 and by this court, in effect, in Barry v. Ransom, 8 then it follows that all claim to it ceases when that obligation is can- celled, either hy the act of the parties or by operation of law. The defendants in the replevin suit could have released one of the sureties with the assent of the other, leaving the latter sole guarantor of the Butler v. Durham, 3 Ired. Eq. 589; Jones v. Blanton, 6 Ired. Eq. 115; Adams v. Hayes, 120 N. Ca. 383 ; Bruce v. Bickerton, 18 W. Va. 342. But two or more co-sureties cannot be joined as defendants in an action at law for contribution. Voss v. Lewis, 126 Ind. 155 (semble) ; Powell v. Mathis, 4 Ired. 83 ; Adams v. Hayes, 120 N. Ca. 383 ; Burnham v. Cboate, 5 Up. Can. Q. B. o. s. 736. —Ed. 1 Only tbeopiuion of the Court is given. Dean, J., delivered a dissenting opinion. ^Ed. 2 3 Den. 130. 3 2 Kernan, 462. 558 TOBIAS V. ROGERS. [CHAP. III. performance of the contract of the principal. What the parties could do b}- agreement the law has done without it. When the sureties con- tracted for their principal, they knew that the national legislature could, in the case that has arisen, discharge either of them from the obligation thereby assumed, and that the right of contribution would cease with the liability to which it was antecedent. If the plaintiff is without remed}*, it is by an act of the law to which he, in common with every other citizen, is presumed to have assented. Contribution is not founded upon, although it may be modified b}-, contract. The right to it is as complete in the case where the sureties are unknown to each other as in any other. The law following equity will imply a promise to contribute in order to afford a remedy. But as this is in most instances a fiction, in aid of an equitable right, it will never be tolerated where the relation upon which the equity is founded is wanting. Such is this case. The liability of the defendant upon the replevin bond was discharged four years before the suit by the obligees against the plaintiff; subsequent to that time the plaintiff and defendant have never stood in cequali jure in reference to the obliga- tion of their principal. The burden, which pressed with its whole weight upon the plaintiff, was removed from the defendant by aid of the bankrupt law. When the former paid the judgment recovered upon the replevin bond, it was as sole surety for Mahoney and Trull, and not as co-surety with the defendant. The plaintiff executed the bond at the request and for the benefit of Mahoney and Trull, and paid the debt secured by it for their use, and not for the use of the defendant as to the whole or any part of the sum advanced. 6 M. & W. 167. No assumpsit arises until the co-surety has paid more than his proportion, even by way of furnishing a lega/ remedy. Davies v. Humphreys. I think the judgment of the Supreme Court should be affirmed upofi the ground that when the money was paid by the plaintiff, the relation of co-surety did not exist between him and the defendant ; and con- sequently no action, either at law or in equit}-, founded on that relation can be maintained. Denio, Johnson, Crippen, and Marvin, JJ., concurred in the fore- going opinion. 1 1 Miller v. Gillespie, 59 Mo. 220 (semble) ; Johnson v. Harvey, 84 N. Y. 363, 366 (semble) ; Smith v. Hodson, 50 Wis. 279 (semble), Accord. In some jurisdictions, if a cause of action has accrued in favor of the creditor against the sureties at the time of the bankruptcy of one of them, the latter's certifi- cate will be a bar to any action for contribution, even though the claim for contribu- tion is founded upon a payment made after the discharge of the bankrupt. Eberhardt v. Wood, 2 Tenn. Ch. 488 ; Cocke v. Hoffman, 5 Lea, 105 {semble) (but see Goss v Gibson, 8 Humph. 197, and Kerr v. Clark. 11 Humph. 77). But see contra, Byers v. Alcorn, 6 111. Ap. 39 ; Dunn v. Sparks, 1 Ind. 397 ; Hays v. Ford, 55 Ind. 52, 57 (semble) ; Dole v. Warren, 32 Me. 94 (but see Fernald v. Clark, 84 Me. 234, 237) ; Swain v. Barber, 29 Vt. 292 ; Liddell v. Wiswell, 59 Vt. 365. The cases in the preceding paragraph were decided under the United States Bank- rupt Laws of 1841 and 1867. The same result was reached by the English courts in SECT. III.] TOBIAS V. EOGERS. 559 interpreting the English Bankrupt Act, 6 Geo. IV. c. 16. Ex parte Porter, 2 Mont. & A. 281 ; Wallis v. Swinburne, 1 Ex. 203. This interpretation, which lets in the evils of double proof against the surety, seems to have been unnecessary. Pollock, C. B., commenting upon Wallis v. Swinburne in Adkins v. Farriugton, 5 H. & N. 586, said : — " I am by no means satisfied that full effect was given to the construction of which the 52d section of the 6 Geo. IV. c. 16, is capable; for there being three sureties, one of whom became bankrupt, it is clear that the holder of the promissory note could have proved for the amount under the bankruptcy of that surety, and if he had done so, I apprehend that neither of the other sureties could have maintained an action against the bankrupt in respect of any money which they paid. Certainly the old doctrine (more than once enunciated by Lord Eldon) was this : That the payment of a dividend and the obtaining a certificate, so far as the bankrupt is concerned, is to be considered as a full satisfaction of the debt. According to that doctrine, if the holder of a security proves the debt under the bankruptcy of one of two sureties, the receipt of a dividend would prevent the other from making any claim upon his co- surety. Indeed, I am far from being satisfied that, as between co-sureties, there is not the same promise and the same liability, and that in one sense they are sureties one for the other; for though in the case of two sureties each is bound to pay a part, yet each is bound to pay the whole if the other is incapable of doing so ; and there is a contract between them that in such case the one will repay the other if he is able, but if he becomes bankrupt he cannot. Though I feel myself bound by the decision in Wallis v. Swinburne, I cannot help making these remarks, because they tend to throw some light upon our present decision. Certainly, I consider that, where a debt is provable, it makes no difference whether it is proved by the surety or the person who holds the security." Co-obligors who are co-principals. — Whenever the creditor of several co-principals is barred against one of them by the latter's discharge in bankruptcy, all right of contri- bution is also lost. Ex parte Rose, 2 Rose, 175 ; Ex parte Watson, Buck, 449 ; Aflalo v. Fourdriuier, 6 Bing. 306 ; Dean v. Speakman, 7 Blackf. 31" ; Frentress v. Mar.kle, 2 Greene (Iowa), 553 ; Butcher v. Forman, 6 Hill, 583 (but see Ellsworth v. Coldwell, 27 How. Pr. 188) ; Clarke v. Porter, 25 Pa. 141 ; Carman v. White, 4 Humph. 301. The decision to the contrary in Ex parte Porter, 4 D. & C. 774, has been deservedly criticised in Griffith & Holmes, Bank. Law, 564, and in Lowell, Bank. 134. Under the United States Bankrupt Law of 1 898, as well as under the English Bank- ruptcy Act of 1883, it is believed, a surety's right of contribution against a co-surety will not survive the latter's discharge in bankruptcy from the claim of the creditor. In other words, full effect is given to the rule prohibiting double proof against an obligor. In re Bingham, 94 Fed. R. 796 ; Wolmershauseii v. Gullick, 1893, 2 Ch. 514. Compare Hill v. Harding, 130 U. S. 699, 704. Wherever the creditor's claim against the surety is not provable, and therefore not barred, a co-surety's claim for contribution is not affected by the surety's discharge in bankruptcy. The illustrations of this rule were decided under former bankrupt laws. Brown v. Lee, 6 B. & C. 689 ; Clements v. Langley, 5 B. & Ad. 372 ; Thompson v. Thompson, 2 Bing. N. C. 168; Vliet v. Wyckoff, 42*N. J. Eq. 642. Similarly, if the creditor's claim against a surety, although provable, is not barred by the surety's discharge in bankruptcy, a co-surety's right of contribution survives also ; c. g., when the United States is the creditor. Smith v. Hodson, 50 Wis. 279. — Ed. 560 1 &-€*- BRADLEY BRADLEY >/ BURWELL. [CHAP. IIL *^*W^"~ **^^y ^^3i>; m**%***\J t^KU-. iP BURWELL and Another ^Executors the Supreme Court, New York, May, 1846 ported /jf3 Demo, 6Ll 23d day of Janu >7 The third count stated that on the 23d day of January, 1832, Thomas Gould, the defendants' testator, and the plaintiff, became sureties for A. C. H. Smith, who was appointed general guardian for M. E. Fuller, a minor, in a joint bond executed by the three, to Fuller, in the penalty of $8,500, conditioned that Smith should faithfully per- form his trust as guardian and render a just and true account when thereunto required : by means whereof, it is averred, the plaintiff and Gould became liable as co-sureties to pay to Fuller any damages which he might sustain on account of any default of Smith as guardian ; and by means whereof also Gould in his lifetime became liable to pay the plaintiff the moiety of any moneys which he, the plaintiff, might be- come liable to pay and might pay to Fuller, by reason of an}' default on the part of the guardian ;■ and that being so liable, Gould in his lifetime, to wit, on the day and year aforesaid, &c, undertook and faithful!}' promised the plaintiff well and truly to pay him the moiety of all such moneys when he should be thereunto requested, after the payment thereof by the plaintiff, according to the bond. The count t hen p roceeds with an averment that afterwards, and aft er the death of Go ulrt, to wit, on the T2d INovember, 1843, Fuller recovered a Jud g- raent in the Supreme Court, against the plaintiff and Smith the guard- ian, lor $z,34'/.o2, on account of tlie detault of Smith, as guardi an, to perform Ins duties according to the condition of the bond ; and that after such recover}', to wit, &c, the plaintiff paid the amount thereof to Fuller, with costs, as he was bound and obliged to do, of all which the defendants had notice. Breach : that the defendants, as executors of Gould, have not paid the plaintiff the moiety of the moneys so by him paid to Fuller, but have hitherto refused, &c. The defendants pleaded to both counts, 1st, That the condition of the bond was not broken by the guardian during the lifetime of Gould, their testator, but was faithfully kept by Smith until after the death of Gould ; 2d. That the plaintiff paid the amount recovered by Fuller voluntarily and of his own accord, and without being obliged by ex- ecution or otherwise to pay the same ; and so they say that he paid the same of his own wrong. &c. The plaintiff demurred to both pleas, and the defendants joined in demurrer. J. A. Spencer, for the plaintiff. iV". Hill, Jr., for the defendants. 1 Only what relates to this count is here given. The arguments of coudspI and a part of the opinion are omitted. — Ed. ■^"•-^-c/ -^ SECT. IILl . BRADLEY 4>. BURWELL. 561 By the Court, Jewett, J. It is a general principle, that in case of a joint bond or obligation, if one of the obligors dies, his representative s are at law discharged from liability to the obligee, and the sur** v ivor alone can be sue d. 1 Chitty's PI. 36. Bu t in equi ty the repre "\ sentatives of such d eceased obligor are liable, unless the deceased w &s^^ L ** r r ~^i a mere surety ; in such case even equity will not extend by imp lication C*~-—C» v *j^, the respo nsiPiuty fi'om that 61 a joint to a joint and several undert ak- N — ing. Weaver v. Shryock ; 1 Sumner v. Powell ; 2 Harrison v. Mirge ; 3 ^^**^ ^"^ Ward v. Webber; 4 Thomas v. Frazer. 5 The counsel for the defendants, on the argument, assumed the prin- ciple that the liability of one co-surety to contribute to another, must depend upon his liability to the creditor, at the time of payment of the debt by such other, or at most at the time that such other's liability was fixed and ascertained, by judgment or decree ; and that as Gould or his representatives were never thus liable to Fuller, no breach of the condition of the bond having been committed in Gould's lifetime, and as by his death his representatives were discharged of any claim by Fuller, the plaintiff had no right of action against the latter for any portion of the amount of the judgment recovered against, and paid b} r him upon the bond, as survivor of Gould. From the examination which I have made I am entirely satisfied that the principle assumed is not sound, and that it cannot be sustained. I think that the law implies a contract between co-sureties to contrib- ute, ratably, towards discharging any liability' which the}' may incur in behalf of their principal, such contract originating at the time they execute the principal obligation ; that there results, by implication of law. a promise on the part of the principal to indemnify his sureties ; and also in like manner a mutual promise between the sureties, to con- tribute proportionally towards indemnifying each other against such liability ; a nd that such implication does not take its origin from the subsequent payment of the money. The right of action for contribu- tion arises, it is true, when tne "surety claiming such contribution pays the money, and not before. Notwithstanding a breach, the debt may be paid by the principal, or relinquished or compromised, and the surety' never compelled to pay ; and in that case he never has a cause of action, either as against his principal or co-surety. The right o f a ction as between the sureties grows out of the original implied agre e- ment, that if one shall be co mpelled to pay the whole or a disprop or- tionate part ot tbe cieot, tne other will pay such sum a s will make t he common burden equal, i n case ot the death of either, this obliga tion devolves upon his* legal respresentat ives. In this respect it is like any other contract made by one in his lifetime, to pa} r money 7 at a future time, absolutely or contingently, who dies before the occurrence of any 1 6 Serg. & Rawle, 262. 2 2 Meriv. R. 30. 8 2 Wash. Va. R. 136. 4 1 Wash. Va. R. 274. 5 3 Ves. Jr. 399 ; 1 Story's Com. on Eq. §§ 162-164. 36 ~=rz^ J*iSL* 562 BKADLEY V. BURWELL. [CHAP. III. breach of the contract. Tom v. Goodrich ; Toussaint v. Martinant ; * Powell v. Smith; 2 Cowell v. Edwards; Deering v. The Earl of Win- chelsea ; Wood v. Leland ; 3 Bachelder v. Fisk. 4 The case of Bachelder v. Fisk is directly in point. The facts were as follows : Ebenezer Fisk, at the time mentioned, was appointed guardian as averred in the declaration — the plaintiff and defendant's testator executed a bond as sureties for the guardian to the judge of probate, in the penalty of $10,000, conditioned for the faithful discharge of the trust by the guardian. The defendant's tes- tator died April 9th, 1815. In June, 1820, the minor came of age, and demanded of the guardian an account and payment of $4, 197.71 which was due from the guardian, who was insolvent ; and the plaintiff, on the 25th of August, 1820, paid to the ward the sum so due in dis- charge of the bond, without suit. The Court held that a surety who had paid the debt of the principal might have an action for contribution against his co-surety ; and that the common form of the action was indebitatus assumpsit for money paid by the plaintiff for the use of the defendant ; that the right of action is founded upon an implied promise by one surety to contribute towards indemnifying the other. It was said that there was in that case (and the same remark is ap- plicable to this case) a technical objection to the usual form of declar- ing, in indebitatus assumjysit, inasmuch as the plaintiff could not allege that he paid the money for the use of his co-surety, after the death of the latter ; and that if he alleged that he paid it for the use of the defendants as executors, it would be to charge the defendants in their own right, which could not be done. That objection, it was said, was answered by the general principle, which is universally recognized and which was applied in Birkley v. Presgrave, 5 that when the law confers a right it will also give a remed^y. That case, as well as this, furnishes an authority as to the form of pleading. The declaration there contained the usual money counts, with a special count setting forth the facts on which the implied promise of the defendant was founded, exhibiting the grounds and nature of the action. It was held also, that in actions of assumpsit the plaintiff, whenever be finds it necessary or useful, might set out his whole case ; and if that showed a valid legal promise by the defendant, whether express or implied, it was sufficient. . It follows that the first plea to the third count furnishes no sufficient answer. 6 The other plea which is demurred to, sets up as a defence to those counts, that the plaintiff voluntarily, and without being compelled by 1 2 T. E. 000. 2 8 j ] in> 049. 3 1 Mete. R. 387. 4 17 Mass. R. 464. 5 i East, 220. 6 Ashby v. Ashby, 7 B. & C. 444, 449, 451 ; Johnson v. Harvey, 84 N. Y. 363; Comes i\ Wilkin, 14 Hun, 428; McKenna v. George, 2 Rich. Eq. 15; Stephens v. Meek, 6 Lea, 226; Tarr v. Ravenscroft, 12 Grat. 642, 652, Accord. Waters v. Riley, 2 Har. & G. 305; Kennedy v. Carpenter, 2 Whart. 344, Contra SECT. III.] KOELSCH V. MIXER. execution, paid the money, and so paid it in his own wrong; and that the same, if it had not been so paid, might and would have been col- lected against Smith. I t is not necessary for the plaintiff, in orde r to sustain his action, to show that he was compelled to pa}- as a suret y Jgd-^* up on the bond by ex ecution. When the contract has been broken, /^ ~/ t he surety may paythe money without suit and recov er the amount of his pr incipa l x (Mauri v. Heffernan 2 ), a nd by analogy, a surety m ay ^> <£^-*»— recover against his co-surety his due proportion upon the like ground. 8 ^^<_ ~ tZ- The pleas, therefore, are clearly bad, and judgment on the demurrer \*+-*fz^SL should be rendered in favor of the plaintiff. V***J3^ "XER, Administrator. - 7f ' "**" , Ohio, ^January Term, 1894. w -%A*>r*&V ~~n ^IteportodinhOhfo fee RtpoA, 207j^--* J ^' '^+~~9 ~"»«-^ - ^ Minshall, J. 4 It is averred in the petition, and not denied in the answer, that the action in which the judgment was rendered again st^-2**fci -^ Koelsch was upon a bond made by one Wichmann as principal, witlK__ -// Koelsch and Mecum, then in life, as co-sureties, for the faithful per- ff • formance of the duties of the principal as treasurer of the school district .- ^ of Reading, in Hamilton County. The substance of the answer is, that ^&***^+^2 the action in which the judgment was rendered, was prosecuted against /r LtfV*' the plaintiff and the defendant, as administrator of Mecum, on what purported to be a bond, both being sued as sureties ; and that it was determined therein by the verdict of the jury that the defendant was not liable on the bond, and that the plaintiff alone was liable thereon. What the issues between the obligee and the defendants, or either of them were, is not stated. Hence, the ground of the defence must be, that, as both were parties to that action, the judgment, irrespective of what the issues were, releasing one of the defendants, is conclusive of his liability upon the bond as against the other, and of any liabilit}' to contribute as a co-surety to the one who was held and compelled to pay the judgment. We do not regard this as the law. Whilst the exact limits of the doctrine of res judicata in its application to some cases, 1 Fishback v. Weaver, 34 Ark. 569, 580 ; Odlin v. Greenleaf, 3 N. H. 270, Accord. — Ed. 2 13 John. R. 58. 3 Pitt v. Purssord, 8 M. & W. 538 ; Gibson v. Love, 2 Fla. 597 ; Judah v. Mieure, 5 Blackf. 171 ; Wood v. Perry, 9 Iowa, 479 ; Goodall v. Wentworth, 20 Me. 322 ; Hich- born v. Fletcher, 66 Me. 209,210; Warner v. Morrison, 3 All. 566 ; Skrainka v. Rohan, 18 Mo. Ap. 341, 344; Hoyt v. Tuthill, 33 Hun, 196; Linn v. McClelland, 4 Dev. & B. 458 ; Acers v. Curtis, 68 Tex. 423 ; Mason v. Pierron, 69 Wis. 585; Hardell v. CarroU 90 Wis. 350, Accord. Stockmeyer v. Oertling, 35 La. An. 467, Contra. — Ed. 4 Only the opinion of the Court is given. — Ed. 564 KOELSCH V. MIXER. [CHAP. III. e not definitely settled, it is accepted as general!}' true, that the judg- ment relied on for that e ffect in subseq u ent lit iga tion, m ust have Tjeen ron ounced "upon the same issues, between the same parties, or their privies, st and jn"g~in~an adve rsa ry character "£o o ne another . By this is not meant that they should have stood uponlthe record as plaintiff and defendant, but that this should have been their real attitude upon the issues tried and determined. As before observed, the defendant does not state what the issues were in the former action. If any were joined between himself and the plaintiff in this action, the determination of which may be relied on as conclusive of the rights of the parties, they should have been pleaded. They cannot be left to conjecture. The mere fact that it was there determined that he was not liable on the bond to the obligee, cannot conclude the plaintiff in this action from demanding contribution from the estate of his deceased co-surety, if, a s a matter o t tact, they were co-sureties on the bond, and the plaintiff ha s b een compelled to discharge all, or more than his just. proportion, o f t he common liabil ity. The subject-matter of the two actions is differ- ent. The former was a suit on a treasurer's bond by the obligee against the makers as co-defendants to recover for a breach of it. The present is a suit by one surety on the bond against the estate of another for contribution ; and had not accrued at the time of the former suit. It is not based upon the bond. In the language of Mcllvaine, J., in Camp v. Bostwick : x " It," the right to contribution, "is an equi t3 r which springs up at the time the relation of co-sureties is en tered in to, and ripens into a cause of action when one surety pays more than his proportion of the debt. From this relation the common law implies a promise to contribute in case of unequal pa3 T ments by co-sureties." And he adds : ' ' Neither the creditor, the principal, the Sta tute of Limi- tations, nor the death of a party, can take it away." And so, itlvas there held, that though th e estate was, by the Statute of Limitations, released iro m its direct liability to the creditor, it, nevertheless, remai n ed l iable to contribute to a co-su rety who had paid more than his moiety of the debt , i^ee, also, Kinkead's Code Pleading, § 457. It is not enough that an issue may have been joined between the obligee and the defendant, as to the liability of the latter on the bond. Whatever that issue may have been, it was not an issue between him- self and his co-defendant, the plaintiff in this action, and could not therefore conclude the latter ; t hough parties to t he suit, the}' were not such in ail adversary character, being simply co-defendants to the suit on the bon d. The plaintiff in this suit could not in the former suit, as a matter of" right, have insisted on the admission or rejection of evidence on the trial of the issue ; had no right to move for a new trial, nor pros- ecute error if aggrieved by the rulings of the Court ; and hence he can- not be held bound by the judgment in any subsequent litigation to which be may be a party. Vose v. Morton. 3 1 20 Ohio St. 337. 2 4 Cush. 31. SECT. III.] KOELSCH V. MIXER. 565 It is the general rule that parties to a judgment arc not bound by it. in. ^^~7 ** a subsequent controversy betwee n eacb other, unle ss they are adversa ry l ff - parties in the original acti om freeman on Judgments, § 158 ; Black '^*-0^-«-*^" on Judgments, §599; 21 Am. & Eng. Enc. Law, 151 ; McMahan v. Geiger; 1 Gardner v. Kaisbeck; 2 BufQngton v. Cook; 8 Harvey v. Os- born ; 4 Cox's Adm'r v. Hill. 5 The case of McCrory v. Parks 6 is much in point. There the action below was a suit by one surety on a sheriff's bond against his co-sureties for contribution. The question arose on a cross-petition filed by one of them, and the reply of the plaintiff. In the cross-petition the allowance of a claim of money paid on the amercement of the sheriff, to which all had been made parties, was asked. The reply controverted the justice of the judgment, and claimed that it should not have been rendered, — that the amercement had been for the alleged failure of the sheriff to pay over moneys made on an execution against the cross-petitioner ; that, though the Court found and adjudged in the former action that the money had been paid, yet, as a matter of fact, it had not been paid, and the judgment was wrongly entered ; and the question arose, whether- having been a party to the former judgment, the plaintiff was not con- cluded by it. The Court heldjiot, for the reason that the parties to this suit wer e not adversary parties in the former suit, and that their respect- ive rights against each other were not in controversy iu that sjiit. The only difference between this case and the one under review is, that in the former case a judgment was pleaded in which the opposite party was held to an obligation, and here he was released. But this can make no difference in the application of the principle ; the conclusive- ness of the judgment, in either case, must depend on the same question, — whether an issue was joined between the parties and determined in the former case, material to their respective rights in the subsequent suit ; for, as shown by the authorities above cited, and thej' are sus- tained by reason, when such is not the case, there is no ground for the application of the doctrine of res judicata; which rests upon that prin- ciple of public policy which requires that where a matter has once been tried and determined on issues joined between the parties in interest in a court of competent jurisdiction, there should, in the interest of society, be an end of litigation. It, however, reaches and concludes only parties t o the issu es ; mid does not affe ct persons who, though pa rties to the s uit, were not parties to the issu e upon which the judgment was r en- dered. The latter being strangers to the issue, are, in a legal sense, strangers to the judgment. Judgment of the Circuit Court reversed, and that of the Common Pleas affirmed. 1 1 73 Mo. 145. 2 28 N. J. Eq. 71. 3 35 Ala. 312. * 55 i n( j. 535 5 3 Ohio, 412, 424. 6 18 Ohio St. 1. 7 Hoxie v. Farmers' Bank (Texas Civil Appeals, 1899), 49 S. W. R. 637, Accord.— Ed. !^- ,-t_~*W -j^U*i) y^tZ+tC^ (^l~**j^ -4r~~i) ?-*^« 'fr-y 566 STEEL V. QIXON. , | CHAP. 11^/ . In the Chan cery Div ision , bekq^e Sir Edw ard F ry, J., "~~"^ yv \~r7* [Reported in 17 Chanafi-y Division Reports, H9.i.]|r- *C / t>J ^y In October, 1878, William Robinson applied to his bankers for an ^N advance of £800. The bankers consented to make the advance upon l upon the terms of his securing them, by means of an assignment or "~sf transfer of sufficient property of his own, from any liability upon the %(/ note. The note was dated the 28th of October, 1878, and was signed by Dixon on the 27th of October, and by Gurney on the 28th October, and was payable on the 30th of April, 1879. Afterwards Robinson procured T. A. Steel and W. Chater to act as the other sureties. Steel signed the note on the 15th of November, 1878, and Chater a day or two before. Neither Steel nor Chater when they signed the note had any knowledge of the agreement between Robinson and Dixon and Gurney that he should give them security. On the 24th of February, 1879, Robinson executed a bill of sale of bis furniture to Dixon and Gurney as security for their liability on the note. The deed contained a power of sale, and it was declared that the grantees should apply the proceeds of sale in the first place in the payment of expenses, and in the second place in or towards pa3 T ment of the share or shares of the moneys which should or might become paj-able upon or in respect of the promissory note, and which share or shares Dixon and Gurney should or might, as between themselves and Steel and Chater, be liable to pay or contribute in the event of default being made by Robinson in the payment of all or any part of the moneys due under the promissory note ; and in the third place towards payment of the residue of the moneys which should or might become payable upon or in respect of the promissory note, and which residue Steel and Chater would upon default of Robinson be primarily liable to pay or contribute, but so that Steel and Chater or either of them should have no right or power to in- terfere or claim any benefit in the provisions of the security; and lastly, to pay any surplus of the proceeds to Robinson. This deed was regis- tered under the Bills of Sale Act. On the 18th of March, Robinson filed a liquidation petition. The promissory note was paid to the bankers at maturity by the four sureties, each of them contributing £200. Dixon and Gurney afterwards sold the furniture comprised in the deed of the 24th of February, 1879, realizing thereby about £500. This action was brought by Steel and Chater against Dixon and Gurney, claiming a dec- laration that Dixon and Gurney were bound to account to the plain- SECT. III.] STEEL V. DIXON. 567 tiffs, as co-sureties of the promissory note, for the sums received by them by the sale of the furniture ; that an account might be taken of the moneys so received ; and payment to each of the plaintiffs of one- fourth part of what should appear on the taking of the account to have been received hy Dixon and Gurney. The trustee in the liquidation of Robinson disputed the validit} 7 of the deed of the 24th of February, 1879, alleging that its execution by Robinson was an act of bankruptcy, and that it was void in toto, as against the trustee. The trustee was afterwards made a defendant to the action, and he delivered a statement of defence. An order was sub- sequently made b} r Fry, J., on the application of Dixon and Gurney, giving them leave to serve a notice, under rule 17 of Order xvi., of the Rules of Court, 1875, on the trustee, for the purpose of raising as be- tween them and him the question of the validity of the deed. A notice was accordingly served by Dixon and Gurney on the trustee, and he delivered a reply, alleging the total invalidity of the deed. The plain- tiffs by their reply to the trustee's defence said that they did not claim an}' interest in the proceeds of sale of the furniture so far as those pro- ceeds exceede d th e £400 secured by the deed of the 24th of February, 1879, to D ix on and Gurney . This was the trial of the action. It was arranged that the question should first be tried whether, as- suming that the bill of sale created a valid security as between Robinson and his trustee and Dixon and Gurney for £400 in favor of Dixon and Gurney, but that it did not create any security in favor of Steel and Chater, Steel and Chater were, as between themselves and Dixon and Gurney, entitled to share in the benefit of the security. Cookson, Q. C, and Warmington, for the plaintiffs. North, Q. C, and C. Lyttleton Chubb, for Dixon and Gurney. There was nothing on the face of the promissoiy note to show how many persons were to sign it ; Dixon and Gurne}' signed it before the plaintiffs. The plaintiffs knew nothing about the agreement for secu- rity when they signed the note. Dixon and Gurne}' expressly stipulated for the security before they signed the note. Why should not one surety be entitled to contract with the principal debtor for a benefit ? Does equity require that there should be equality between co-sureties when some of them take care to agree that they shall be specially favored and the others do not ? [Fry, J. That would equally apply to a suret}^ obtaining a payment of money from the principal debtor.] If, after each of the four sureties had paid his £200, one of them had received something from the principal debtor, could he have been com- pelled to bring the same into hotchpot? If two of the co-sureties, after paying their proportion, sue the principal debtor and the other two re- fuse to join, and the two who sue recover something from the principal debtor by means either of execution upon a judgment in the action, or by his paying after action brought, or even if he pays upon a threat of 568 STEEL V. DIXON. [chap, iil proceedings, could the}* be compelled to share the amount thus recov- ered with their co-sureties? [Fry, J. Possibly if the co-sureties would not do their part in suing the principal debtor they might lose their right to contribution. 1 ] Fry, J., after stating the facts, continued : — The plaintiffs, by their reply to the trustee in the liquidation of Rob- inson, make no claim under the deed, except to the extent of the £400 which has been raised under it for the defendants Dixon and Gurney, and therefore the question on which I have now to express my opinion is this, assu ming that the deed created a vali d security in favor of Dixon and Gu rney, m ust it not have cr eated a like valid securit y in favor of the plai ntiffs, and are not the plaintiffs, as between themsel ves and Dixon and Gurne}', entitled to share in the secur ity? In my opinion the plaintiffs are entitled to share in the benefits secured by the deed to the defendants. In coming to that conclusion, I base myself on the general principle applicable to co-sureties, as es- tablished by the well-known and often-cited case of Deering v. Earl of Winchelsea, the short effect of which I take to be that, as b etween c o- sureties, there is to be equality o f the burden and of the ben efit. When I say equality J do not mean necessarily equality in its simplest for m , b ut what has been sometimes called proportionable equali ty. The re- sult of that case was expressed b}^ Baron Alderson in Pendlebury v. Walker 2 in these terms, that " where the same default of the principal renders all the co-sureties responsible, all are to contribute ; find then the law superadds that which is not only the principle but the equitable mode of applying the principle, that they should all contribute equally, if each is a surety to an equal amount ; a nd if not equally, then pr o- portionably to the amount for which each is a su rety." I hold, there- fore, that" the result of Deering v. Earl of Winchelsea is to require thaf th e ultimate burden, whatever it may be, is. as between the co-suret ies, t o be borne by them in propor tion to the shares of the debt for which the y have m ad e themsel ves r esponsible . If that be the case, it follows that each surety must bring into hotch- pot every benefit which he has received in respect of the suretyship which he undertook, and if he has received a benefit by way of indemnity from the principal debtor, it appears to me that he is bound, as between him- self and his co-sureties, to bring that into hotchpot, in order that it may be ascertained what is the ultimate burden which the co-sureties have to bear, so that that ultimate burden may be distributed between them, equally or proportionably, as the case may require. 8 1 The argument for plaintiffs and a part of that for defendants are omitted. — Ed. 2 4 Y. &C. Ex. p. 441. 8 Berridge v. Berridge, 44 Ch. D. 168; Bell v. Lamkin, 1 St. & P. 460; White v. Banks, 21 Ala. 705 ; Steele v. Mealing, 24 Ala. 285 ; Tyms v. Dejarnette, 26 Ala. 280; Taylor v. Morrison, 26 Ala. 728; Hartwell v. Whitman, 36 Ala. 712; Mun- ien v. Bailey, 70 Ala. 63 ; Vandiver v. Pollak, 107 Ala. 547; Fishback v. Weaver, 34 Ark. 569 ; Gibson v. Sheehan, 5 App. Cas. Dist. Col. 391 ; Cannon v. Collaway, 5 Del. Ch. 559; Simmons v. Camp, 71 Ga. 54; Frink v. Peabody, 26 111. Ap. 390; SECT. III.] STEEL V. DIXON. 569 In coming to that conclusion, as I do upon principle, I am much strengthened by the American authorities to which my attention has been called by Mr. Cookson. Mr. Justice Story, in his Equity Juris- prudence, asserts the principle in these terms : * " Sureties are not only entitled to contribution from each other for moneys paid in discharge of their joint liabilities for the principal, but they are also entitled to the benefit of all securities which have been taken by any one of them to indemnify himself against such liabilities." And in the case of Miller v. Sawyer, 2 which was before the Court of Chancery in the State of Vermont, the principle is stated thus by Mr. Justice Barrett, the learned judge who delivered the judgment of the Court. Having referred to Deering u. Earl of Winchelsea, he said : " For present purposes it is needless to cite and discuss the books and cases to any considerable extent, in which this subject is treated, and the leading principles of it Comegys v. State Bank, 6 Ind. 357 ; Whiteman v. Harriman, 85 Ind. 49 ; Sanders v. Weelburg, 107 Ind. 266; Reiser v. Beam, 117 Ind. 31 ; Kelso v. Kelso (Indiana Ap- peals, 1896), 44 N. E. R. 1013; Reinhart v. Johnson, 62 Iowa, 155; Hoover v. Mow- rer, 84 Iowa, 43 ; Seibert v. Thompson, 8 Kan. 65 ; Goodloe v. Clay, 6 B. Mon. 236 ; Teeter v. Pierce, 11 B. Mon. 399; Smith v. Conrad, 15 La. An. 579; Scribner v. Adams, 73 Me. 541 ; Lane v. Stacy, 8 All. 41 ; Schmidt v. Coulter, 6 Minn. 492 ; Mueller v. Barge, 54 Minn. 314; Barge v. Van der Horck, 57 Minn. 497 ; Chilton v. Chapman, 13 Mo. 470 ; McCune v. Belt, 45 Mo. 174 ; Tolle v. Beckler, 12 Mo. Ap. 54 ; Low v. Smart, 5 N. H. 353 ; Brown v. Ray, 18 N. H. 102 ; Currier v. Fellows, 27 N. H. 366 ; Paulin v. Kaighn, 27 N. J. 503 (semble) ; Wolcott v. Hagerman, 50 N. J. 289; Davis v. Toulmin, 77 N. Y. 280 (semble); Crisfield v. Murdock, 127 N. Y. 315, Ramsay v. Lewis, 30 Barb. 403 ; Fielding v. Waterhouse, 40 N. Y. Sup'r Ct. 424 ; Fagan v. Jacocks, 4 Dev. 263 ; Gregory v. Murrell, 2 Ired. Eq. 233; Hall v. Jones, 8 Ired. 56 ; Barnes v. Pearson, 6 Ired. Eq. 482; Leary ;;. Cheshire, 3 Jones, Eq. 170; Parham v. Green, 64 N. Ca. 436 ; Wilson v. Stewart, 24 Oh. St. 504 ; Farmers' Bank v. Teeters, 31 Oh. St. 36; Farmers' Bank v. Snodgrass, 29 Oreg. 395 ; Agneww. Bell, 4 Watts, 31 ; Shaeffer v. Clendenin, 100 Pa. 565 ; Field v. Pelot, McMull. Eq. 369 ; Bobbitt v. Flow- ers, 1 Swan, 511 ; Glasscock v. Hamilton, 62 Tex. 143 ; Lacy v. Rollins, 74 Tex. 566 {semble); Urbahn v. Martin, 19 Tex. Civ. Ap. 93; Miller v. Sawyer, 30 Vt. 412; Aldrich v. Hapgood, 39 Vt. 617; Somers v. Johnson, 57 Vt. 274 (semble); West v. Belches, 5 Munf. 187 ; McMahon v. Fawcett, 2 Rand. 514; Neely v. Bee, 32 W. Va. 519 ; Latouche ?:. Pallas, Hayes, 450, Accord. The rule is the same when the surety, inste ad of receiving a security from the pr in- ci pal "directly, o btai ns it by assignllienr from the creditor on paving the claim nf ~thp> latter. In re Arcedeckne, 24 Ch. D. 709. If the sureties have paid their respective shares of what is due the creditor, a nd one of tlieriT afterwards reL'BlvtJti from Lll(j pri ncipal any property as an indemnity7 "*he is under no duty to snare tins indemnity with his co-sureties. Harrison v. Phillips, 46 Mo. 520; Messer v. Swan, 4 N. H. 481 J Hall v. Cusliman, 16 N. H. 462; Allen v. Wood, 3 Ired. Eq. 386 ; Urbahn v. Martin, 19 Tex. Civ. Ap. 93, 97. The general rule which r equires a surety who receives a security for his own in - d emnify to share it with his co-sureties, does not apply unless the suretyship of fi ach is for w hat is substantially the same liability of the principa l. Lacy v. Rollins, 74 Tex. 566 ; Somers v. Johnson, 57 Vt. 274. In Leggett v. McClelland, 39 Oh. St. 624, it was decided that the rule hy which an indemnity to on e surety enures to the benefit of the co-sureties does not apply t a •= p roperty convey ed t o one surety by a stranger] See also Pfluger v. Wilshusen, 17 N. Y. Sup. 5167 Compare Shaeffer v. Clendenin, 100 Pa. 565. — Ed. 1 11th ed. pi. 499. 2 30 Vt. 412. 570 STEEL V. DIXON. [CHAP. III. applied in settling the rights and duties of parties. It may be compre- hensively stated, that persons subject to a common burden stand in their relation to each other upon a common ground of interest and of right, and whatever relief, by way of indemnity, is furnished to either by him for whom the burden is assumed, enures equally to the relief of all the common associates ; " and in the course of his judgment he refers, amoiF other cases, to that of Hall v. Robinson, 1 in which Chief Justice Ruffin said: "The relief between co-sureties in equity proceeds upon the maxim that equality is equity, and that maxim is but a principle of the simplest natural justice. It is a plain corollary from it that, when two or more embark in the common risk of being sureties for anot her, a na one ot tnem subsequently obtains from the principal an indemn it}" or c ounter-security to any _e xtent,_i t e nures to the b enefit of'j tll. The risk and the relief ought to be coextensive." These American decisions are, as it seems to me, exactly in point. Mr. North has urged that a difference may arise where the security taken by one co-surety is taken by virtue of a bargain entered into be- tween him and the principal debtor at the time of his becoming surety. In my judgment that is immaterial. I think it does not affect the pr in- ciple of equity to which I have referred whether the se curity _i s the r esult of a contract witTFthe d ebtor at the time when the co-surety becomes a surety, or is volunt arily given subsequently, or arises in any other manner whatever. 1 repeat that whatever goes to dimini sh the total amount of the burden must, in my judgment, be broughtTTnto hot chpo t. In saying that, however, I wish to guard myself against its being supposed that this equity may not in any case be varied or departed from. Those to whose benefit the security enures may, of course, con - t ract themselves out of the benefi t, ' z and the question may therefore well have to be considered in each case whether there has been such a con- tract between the co-sureties. But a contract between one surety and the debtor is not to be confounded with a contract between the co-sure- ties — a contract by which one co-surety renounces his equity in favor of another. 3 In the next place, cases ma}' arise in which one co-surety, by reason of his default in performing his duty towards the other, may estop himself from asserting the equity which he would otherwise have had against him. Some such cases have been suggested by Mr. North in the course of his argument. But neither of those principles appears to me to apply in the present case, because here the contract upon which the security was given was made between the debtor and two of the co-sureties, and was not communicated at the time of their contract of suretyship to the other co-sureties, and there appears to me to be nothing 1 8 Iredell, 56. 2 White v. Banks, 21 Ala. 705, 712 (semble) ; Moore i>. Moore, 4 Hawks, 358; Long v. Barnett, 3 Ired. Eq. 631 (semble) ; Leggett v. McClelland, 39 Oh. St. 624, 626 (semble), Accord. — Ei>. 3 Thompson v. Adams, Freem. Ch. (Miss.) 225, Contra. — Ed. SECT. in.] PAULIN V. KAIGHN. 571 in the conduct of the plaintiffs (upon the assumption on which I am now proceeding) which can deprive them of the benefit of their right against the co-sureties. Therefore, on this assumption I hold that the plaintiffs would be entitled to the benefit which they claim. 1 STEPHEN F. PAULIN v. CHARLES KAIGHN. In the Court of Errors and Appeals, New Jersey, June Term, 1861. [Reported in 29 New Jersey Reports, 480.] Haines, J. This was an action of assumpsit brought by Kaighn against Paulin. The plaintiff below, at the trial, proved that he and the defendant below, together with one Cooper, executed to William Champion a joint bond for the payment of money due to Champion from the South Camden Ferry Company, whose joint sureties they thereby became. It further appeared that Champion had recovered judgment against all 1 In Berridge v. Berridge, 44 Ch. D. 168, there were five co-sureties on a guaranty of £2,000. A policy of life insurance had been assigned by the principal to one of the co-sureties. The sureties paid their respective shares of the £2,000 to the creditor. North. J., said : — " Then the plaintiffs are also entitled to the £400 which they paid to the bank on account of the £2,000; and when that £400 has been paid to the plaintiffs or retained by them, it cannot be applied solely in satisfying them ; but it must, according to the doctrine of Steel v. Dixon, 17 Ch. D. 825, be shared between them and the other co- sureties. Then, will the plaintiffs be entitled to receive anything more 1 In my opinion they will, because otherwise the estate of their testator will not have been released ' from all liability in respect of the suretyship.' It will only have been repaid one-fifth part of the £400 which it has paid to the bank, because the rest of the £400 will have gone to pay the co-sureties, who, on the principle of Steel v. Dixon, 17 Ch. D. 825, had a legal right to share in the £400. That being so, something more must be paid to the plaintiffs. There must be paid to them such a further sum as will make up to them that which has been taken away from them by reason of the claim of the other co-sureties to share in the £400. Then, again, that further sum, when it has been paid to them, will have to be distributed in a similar manner, and therefore, if the rights were worked out in that way, there would be successive payments made out of the policy money to the plaintiffs until the rights of all the co-sureties had been satisfied, and then only the plaintiffs would be in a position to say that they had got the £400 to which they are entitled under the deed of August, 1884. "In my opinion, this result necessarily flows from the doctrine of Steel v. Dixon, though I do not think that the point was actually decided there. In that case, the plaintiffs, for some reason I could never understand, limited their claim to a share of the first payment received by their co-surety by means of his counter-indemnity, and did not ask to share in any subsequent payments made to him. They did not claim to share in the whole of the proceeds of the counter-security, but only to the extent of the £400. I think the principle of the decision would have entitled them to more, if they had asked for it, and I think it entitles the co-sureties in the present case to th« telief which I have mentioned." — Ed. ^ *~JL /? st*jeJ2, Pzz+P-S ^ZZ***^ 574 SANDERS V. WEELBURG. [CHAP. IIL SANDERS v. WEELBURG, Executrix. In the Supreme Court, Indiana, May Term, 1886. [Reported in 107 Indiana Reports, 266.] Howk, C. J. 1 Appellant shows in his complaint, as we have seen, that he and the appellee were co-sureties of one Frederick Weelburg, as principal debtor, in a certain judgment rendered against all of them, on January 29, 1879, in and by the Superior Court of Marion County; that on April 9, 1879, appellant paid the balance then due of such judgment, interest and costs, to wit, the sum of $1,811.50; that on the next day, April 10, 1879, an execution was issued on such judgment in favor of appellant, as such co-surety, and delivered to the sheriff of Marion Count}' ; that by virtue of such execution, such sheriff offered and sold to appellant certain property of the principal debtor, on April 26, 1879, for $378, and, on May 31, 1879, certain real estate and lease- hold interests of such principal debtor, for $50, and, on July 14, 1879, certain personal property of the principal in such judgment, for $28.29 ; and that on April 2, 1880, such execution was returned, no other prop- erty found of Frederick Weelburg, principal in such judgment, whereon to levy. On such several sales to appellant, his complaint shows that he paid the costs and credited the remainder of his several bids on the judgment. After his several purchases of the property of Frederick Weelburg, principal in such judgment, and after he had credited the judgment with the net amounts of his several bids for such property, as stated in his complaint, appellant filed his claim herein to recover of the appellee, as his co-surety in such judgment, by way of contribution, the sum of $700 and interest thereon at the rate of eight per cent per annum from and after March 13, 1879. It is claimed on behalf of the appellant, that he purchased the property of the principal in the judgment, at public sales thereof by the sheriff of the count}', where all parties, the appellee included, had the right to appear and bid therefor ; that he had the lawful right to purchase such property, at such sales, and as no one would or did bid more therefor than he, to purchase the same at and for the amounts of his several bids, without regard to the actual value thereof; and that, having so purchased such property, he cannot be required to account therefor even to the appellee, as his co-surety, at its actual value, or at an}' greater value than the aggregate amount of his several bids. On the other hand, it is claimed on behalf of appellee that, as she render of securities should at law defeat his claim for contribution from his co-surety. The concurring opinion of Van Dyke, J., on this point, and the dissenting opinion of Brown, J., are omitted. — Ed. 1 Only a part of the opinion of the Court is given. — Ed. ' SECT. III.] SANDERS V. WEELBURG. 575 was the co-surety of appellant in such judgment, equity, good consci- ence, and fair dealing exacted of him the utmost good faith in his trans- actions with her in relation to the judgment, and in connection with the property of the principal in such judgment ; that as the judg- ment was a common burden to her and appellant, as such co-sureties, so the property of the principal in the judgment became and was a common fund for the benefit and protection alike of each and both of them ; that b}- suing out and delivering to the sheriff of the count}' an execution on such judgment, in appellant's favor, he acquired a security for the payment of the judgment, by the lien of the execution on the property of the principal therein, which security enured to the benefit and for the protection of the appellee, as his co-surety ; that by appel- lant's acts in procuring forced sales of such property of the principal in the judgment, and in becoming the purchaser thereof at prices rela- tively nominal, the value of such security became and was largely depreciated, if not wholly lost ; and that, by means of the premises, appellant became and was justly chargeable with the fair and reason- able value of such security to the appellee, as his co-surety, in the equitable adjustment of appellant's claim herein to contribution. These conflicting claims of the parties respectively involve, as it seems to us, the entire merits of the controversy in this cause. If appellant is right in his claim or contention, as we have heretofore stated it, the general verdict for appellee is wrong, and the judgment thereon cannot stand, but must be reversed, because the record before us clearly shows that the case was tried below upon a theory which antagonizes and is irreconcilable with appellant's claim or contention. If, on the other hand, appellee's claim or contention, as it is heretofore stated, is the correct one, as we think it is, the general verdict is right upon the evi- dence, and the judgment below must be affirmed. It is abundantly shown by the evidence in the record, that the fair and reasonable value of the property of the principal in the judgment, which was levied upon and sold by the sheriff upon the execution in favor of appellant, and of which he became the purchaser as aforesaid, largely exceeded in the aggregate the full amount due him on such judgment, of principal, interest, and costs. Appellant, having fully paid and satisfied the judgment to the judg- ment creditor or plaintiff, b} T means of such pa}'ment, acquired at the time a cause of action against the appellee, as his co-surety in such judgment ; but in his suit on such cause of action, it is clear, we think, that under our law he could not recover of the appellee any more than she was " equitably bound to pay." Prima facie, appellee as the co-surety of appellant was liable to him for the one-half of the sum paid by him to the judgment plaintiff, in satisfaction of such judgment ; but this prima facie liability was subject to reduction by whatever sums could be realized from the property of the principal in such judg- ment. The property of the principal in the judgment was a common fund for the benefit and protection of both the sureties alike, the ap- 576 SANDERS V. WEELBURG. [CHAP. IIL pellee as well as the appellant. By bis payment of the judgment to the judgment plaintiff, appellant became and was practically, at least, the owner thereof, and was fully authorized to sue out execution thereon for his own use, under the provisions of section 1214, R. S. 1881. The judgment was then a lien on the real estate and chattels real of the principal therein ; and when, on the next da}' "after his payment of such judgment, appellant sued out an execution thereon, in bis own favor, and delivered the same to the sheriff of the county, be thereby acquired a valid lien on all the personal property of such principal. These liens upon the real and personal property of the principal in the judg- ment were a security which appellant had acquired and held as afore- said ; but such security enured in equity to the benefit and for the protection of the appellee, as the co-surety of appellant in such judgment. In Sheldon on Subrogation, section 143, the law on the subject under consideration is thus stated : " When one of two or more co-sureties obtains in any manner a security for the payment of the debt, be does this for the benefit of all the sureties ; he is a trustee for his co-sureties as to such security, and is held for them to the duties which arise from that relation, and must do no act, or voluntarily omit to do any act, by which such security will be depreciated or lost, but must faithfully apply it to the payment of the debt ; or he will be chargeable to his co-sureties with the amount of the security, in the adjustment of their proportions of the debt." The language quoted and the doctrine de- clared are fully supported by the numerous authorities cited in the foot-notes b} r the learned author. 1 . . . Where one surety obtains a security, it enures at once to the benefit alike of himself and his co-surety. He cannot deal with such security to his own advantage, and to the prejudice of his co-surety, without consulting the latter and without his assent. He occupies the position of a trustee for his co-surety, and cannot deal with the fund to the prejudice of the latter, without his authority or consent. In such case, where the surety has it in his power, for his own advantage, to sacrifice the common fund which, in good conscience, he is bound to protect, the general doctrine is that he will not be permitted to avail himself of any such advantage to his own profit, and to the loss and detriment of bis co-surety. We do not decide, in this case, that appellant did not have the right to sue out execution on the judgment, and procure the sale by the sheriff of the principal's property ; for this right he clearly had. What we do decide is that if the appellant, at such sales, purchased the prop- erty' of the principal, at comparatively nominal prices, and then sued his co-surety for contribution, she had the right, in bar of such suit, to 1 The Court here discussed Hall v. Robinson, 8 Ired. 56 ; Owen v. McGehee, 61 Ala. 440 ; Schmidt v. Coulter, 6 Minn. 492 ; and Comegys v. State Bank, 6 Ind. 357. — Ed. ***) ~^^<-e^ -^' ' ^- show, as she did, that such property, at its fair value, was more than • -*^->% sufficient to satisfy such judgment. Our conclusion is that the Court committed no available error in over- ruling appellant's motion for a new trial of this cause. / ~* The judgment is affirmed, with costs. 1 *2> f a-~) V*. H, TITCOMB v. JO JOHN ILLIAM he Supreme Judicial Court* Maine [Keporteaii ^— O ^ — MCALLISTER. - 3 _>a_ March i4L^18 89. _ /, ClN eportecTin 81 Hldine Reports, 399/] : *^D N Haskell, J. 2 The plaintiff, being accommodation indorser upon *-/p~~^J- 'Irt demand note for $1,000, became co-surety with the defendant upon fj r another demand note, of the same promisors, for $1,600 ; and, to secure himself on both notes, the plaintiff took from the makers of them a mortgage~o fo*ne-sixteenth of the "rJarkeutine " Addle E. Sleeper," con- ditioned to retransfer the security upon payment of both notes. Tit- comb v. McAllister. 3 It is contended that the security should be applied to both notes pro ' - rata; and certain admissions of the plaintiff are relied upon to work out that result. The mortgage recites : "I have this day received a bill of sale, &c, as collateral security for the payment of said two notes." The ad- missions amount to no more than that the plaintiff believed the security sufficient to save him harmless from both notes. He took the security primarily for his own benefit. The defendant has no right to it by con- tract ; but only such equity as works equality among those of equal merit. This is not wholly the case of a surety who, gaining security for the debt, is held in equity to share it with his co-sureties, by ap- 1 Livingston v. Van Rensselaer, 6 Wend. 63, Accord. In this case Sutherland, J., said, p. 73 : " If the mortgage sale had been for a substantial though inadequate price, instead of a merely nominal one, it would have admitted of very serious doubt whether Livingston would not have been concluded from instituting an inquiry into the actual value of the lands at that time. He certainly would, if he had had actual instead of constructive notice of the sale. He might have attended the sale, and have taken care of his own interest by bidding more, if he thought the lands were worth more. He could not have folded his arms, and have retained the privilege of consid- ering Van Rensselaer either an absolute purchaser, or as his trustee in the transaction, according as circumstances should determine the one or the other to be most beneficial to himself. Equity will not permit a co-surety voluntarily to assume a position which will secure to him all the advantages, without exposing him to any of the perils which may result from the acts of his associate ; but under the circumstances of this case, the sale was properly considered by the Chancellor as affording no legal evidence of the value of the mortgaged premises at the time of the sale." See also Moorman v Hudson, 125 Ind. 504, 506-507. —Ed. 2 Only a portion of the opinion of the Court is given. — Ed. 8 77 Maine, 353. 37 ----- -*— y rj/ L-g-fc.~- — ^7 ^C--t*-C-<7 '-A-»~-»7 ^-/-A^; ^a-»**-r jjkt, Ma4ne, June Term, 1841. aine ieports, 364.] Exceptions from the Middle District Court, Redington, J., presiding. Assumpsit for money paid, laid out and expended, the suit having been commenced July 22, 1839. The plaintiff and defendant had been sureties for Asa H. Hankerson in a note to G. W. Stanley. Fuller re- ceived certain property of Hankerson to be appropriated to the pay- ment of the note, and it was disposed of, and the proceeds paid over to Stanley at different times, the last payment having been made March 12, 1834. In October, 1838, the plaintiff paid to Stanley the balance then due on the note, amounting to $83.05. The defendant proved, that on March 6, 1839, the plaintiff settled with Hankerson for one half the amount he had paid on his account, and gave him a receipt as follows: "March 6, 1839. This da}- re- ceived of Asa H. Hankerson forty-five dollars in full for my half of a note signed by myself and William C. Fuller, and Asa H. Hankerson as principal, dated September, 1832. The property I received for this was for my special benefit. Horace Gould." And at the same time Hankerson gave Gould a writing of this tenor : " This may certify that the money I paid Horace Gould is for his separate benefit, and not for 1 7 Allen, 270. 2 Moore v. Moberly, 7 B. Mon. 299, Contra. Compare Mueller v. Barge, 54 Minn. 314; Brown v. Ray, 18 N. H. 102.- Ed. SECT. III.] GOULD V. FULLER. 579 William C. Fuller's and his together. March 6, 1839. Asa H. Hank- erson." The plaintiff requested the judge to instruct the jury that the plain- tiff was entitled to recover of the defendant the other half of the amount which had been paid by him with interest from the time it was paid. The judge declined to give this instruction, and among other things did instruct them, that if all of the indorsements upon the back of said note were paid from the funds of Hankerson, and if defendant had paid on the note no more than he had received from said funds, then the plaintiff would be entitled to recover of the defendant only one half of such sum as should remain, after deducting from the amount paid by him all the moneys which he had received in pa3*ment for his part of the note on March 6, 1839, with interest on the same from the date of the writ, this being one half the actual loss which the plaintiff had sus- tained. The jury found a verdict for the plaintiff, assessing the damages at $12.72. The plaintiff filed exceptions to the instructions, and to the refusal to instruct. May, for the plaintiff. 1 E. Fuller, for the defendant. The opinion of the Court was by Weston, C. J. Where one of several co-sureties receives security or moneys from the principal, the whole enures to the benefit of all the sureties. It has the same effect as if so much had been paid by the principal himself to the creditor. Until an adjustment is made, whatever indemnity of payment one receives, he must account for with his co-sureties. So the law was laid down by Jackson, J., in Bachelder v. Fiske et al? To the same effect are the cases of Messer v. Swan 8 and of Low v. Smart. 4 In Messer v. Swan it was held that, in general, whatever pa}'ment one surety may receive from the principal, shall enure to the benefit of all. I t was, however, there intimated, that where paym ent has been made, and the matt er of con tributio n has been a d- j usted, each maj^look to the pt'liretpal for a reimb ursement of his share, on his separat e account. In the case before us, "the plaintiff, in October, 1838, paid the bal- ance of the whole debt, for which the defendant stood equally bound. This gave him a right to call upon the defendant for the one half of this sum, and for the other his remedy was against the principal. And it ought not to be impaired by the neglect of the co-surety to pay his just proportion. When the whole of the obligation, for which both were liable, was discharged, the plaintiff's claim for reimbursement against his co-surety and the principal, each for one half, became fixed. 5 1 The argument for plaintiff is omitted. — Ed. 2 17 Mass. 464. ! 4 N. H. 481. 4 5 N. H. 353. 5 In Strong v. Blanchard, 4 All. 538, i t was d ecided that one of two sureties on pay- y^^ ing the creditor in full acquired a right to recover tne nul amount irom tne principal, <^ 580 (S c~ w «»■■.■» ^ DAVIS V. TOULMIN. t^^o-s. [chap. III. This should give to him all the rights which would result from an actual adjustment between the parties. It is in fact an adjustment, which the law makes, arising from the equity of the case. The claim for contribution depends upon a doctrine purely equitable. Hence it is not enforced in favor of one suret}' against another, who became such at his request. Turner v. Davies. So if one surety actually pays, we do not feel the force of the equity, which would suspend his right to receive for his several benefit a reimbursement of one half from his principal, until it might suit the convenience of his co-surety to make contribution or until he might be compelled to do so by an action at law. It would be withholding from a vigilant suret}', in favor of a negligent one, an advantage to which he is well entitled. If the paying surety subsequently receive a sum of money from the principal, not claimed or specifically paid for his several reimbursement, it might enure to the joint benefit of himself and his co-surety. But if pajinent is paid and received, as it was here, to restore to him what the principal alone, and not the co-surety, was bound to refund, it is only carrying out an adjustment which the law imposes, and we per- ceive no good reason why the liability of the negligent surety should be thereby diminished. In our opinion the instructions requested of the presiding judge should have been given. Exceptions sustained. 77— ^—^ S. S. DAVIS, Respondent, v. H. TOULMIN, Appellant. In the CoupvT op Appeals, New York, May, 1879. [Reported i?i 77 New York Reports, 280.] Church, C. J. 1 The action was for contribution between co-sureties. The exception raises the question whether in such an action it is com- petent for the defendant to avail himself of an indebtedness of the plaintiff to the principal, as a defence. The authorities are decisive against it. O'Blemis v. Karing ; 2 Lasher y. Williams ; 8 Springer v. Dwyer. 4 If the co-surety suing for cont ribu- tion has received any money or property as payment, or security from a nd tha t fl "'° "'rfht wtt tW los t, although, be fore i ts enforcemen t, th ejo-snretv p air! him a moi ety b y way of con tri bution. A. moiety of the amount recovered from th e principal would , of cour se, be held iu trust for the co-su rety. See also Pinkerton v. lallaterro, 9 Ala 547. In Odlin v. Greenleaf, 3 N. H. 270, one of two sureties on a note paid the creditor three months after the maturity of the note, and four years later, when his right to recover indemnity from the principal was barred, collected a moiety of his co-surety. The latter was allowed to maintain a count against the principal for money paid. — Ed. 1 Only the opinion of the Court is given. — Ed. 2 57 N. Y. 649. 3 55 n. Y. 619. * 50 N. Y. 19. /U- SECT. III.] (/ ESHLEMAN V. BOLENIUS. t he princip al, he will be obliged to account for the same, but a simple indebtedn ess to the principal can not be availed of "by the defendant. In case of insolvency there ma}' be cases where equity, having all the parties before it, might relieve, 1 but no such question is presented in this case. We concur with the opinion at Special Term. The judgment must be affirmed. All concur. M. Judgment affirmed,* OLENIUS^^/7 ^ October 5, 1J fsit agai f y In the Supreme Court, "Bennsylvani - _ ~T [Reported in 144 Pattnsulvama Renorts72 On June 3, 1890, David G. Kshleman brought assum Robert M. Bolenius, his co-surety in the bond of D. M. Harman administrator of the estate of John H. Harman. The defendant filed an affidavit of defence setting forth that the plaintiff was attorney for the administrator, D. M. Harman, as well as co-surety with the defendant on the said administrator's bond ; that th plaintiff as such attorney collected $1,374.61 and deposited the same with a banker, taking a certificate of deposit payable to D. M. Harman, administrator, twelve months after date, with interest at four per cent ; that this conduct of the plaintiff was unknown to the defendant ; and that the banker died insolvent a few months after the issue of the certificate of deposit. 3 Mr. Justice Green. The affidavit of defence contains a positive averment that the money received by the plaintiff for Daniel M. Har- man, administrator, &c, was deposited by the plaintiff in Henderson's bank, and that he took therefor a certificate of deposit payable twelve months ^after date, with interest at four per cent. This certificate we held, in Baer's App., 4 to be a loan no t authorized by _law 2 _"for whietrTfie adm inistrator was personally liable. It seems now that Mr. Eshleman, who was attorney for the administrator, was also one of the sureties on his bond, and paid the loss himself. He seeks to recover in the present action one half the loss from the defendant, who was his co-surety. The defendant alleges in his affidavit of defence that the loan made to the Henderson bank by the plaintiff was made without his knowledge or consent, and that he never ratified the action 1 Bezzell v. White, 13 Ala. 422 ; Neely v. Bee, 32 W. Va. 519 ; Smith v. Dickinson, \00 Wis. 574 (semble), Accord. — Ed. 2 O'Blemis v. Karing, 57 N. Y. 649 ; Smith v. Dickinson, 100 Wis. 574 {semble), Record. Goepel v. Swinden, 5 D. & L. 888, Contra. — Ed. » The statement of the case has been abridged. — Ed. * 127 Pa. 360. <^> -*«-*- ^Z**-*i^~ -^_ 582 ESHLEMAN V. BOLENIUS. [CHAP. HI. of the plaintiff in making the loan. The loss of the money was the result exc lusively of the unauthorized loan made by th e pl aintiff to"T he Henderson bank, and it is difficult to understand upon what principle t he d efendant can be held responsible lor any part of the loss as - betw een him a nd the planum, ine iacts set torthin the affidavit "of defence must be accepted as verity for the purposes of the case as it is now presented, and upon these facts the plaintiff's own action was the sole cause of the loss. Had the loan been made by the administrator, a different question would have arisen. But, as it is, conceding the entire good faith of the plaintitf, the case must be determined by the very familiar principle, that, where one of two innocent persons must suffer, he must bear the loss whose act or neglect has been the occasion of the suffering. Jeffers v. Gill. 1 It was the plaintiff himself whose act occasioned the loss, accordin g to tKe facts stated in the affidavit o f defence, and therefor e he cann ot recover against the defendant, who was entirely innocent of any participation lh the act. Judgment reversed, and 'procedendo aicarded. 2 1 91 Pa. 290. 2 2ases The surety's righ t to contribution was for feited by his misconduct in the follo wing s": Cnshel'd "v. MuTdock, 127 N. X. 315; Commw. v. Cooper (Pennsylvania, 1892), 24 A. R. 339; Flanagan v. Duncan, 133 Pa. 373. — Ed. -\ SECT. IV.] GIGLIS V. WELBY. 583 ^__^ N SECTION IV. \S , V y^tjut */ —?r* * A Exoneration. ' /^/ «— / r SE BASTTANGIGLIS v. ROBERT WfiLBY, Priest. „ In Chancery, before. Lord Morton, C. May 15, T492. _^- Jn Chancery, before. Lord Morton, C. May 15, [Reported in 1 Calendars fff Rwceedmgs in Chancery, cxx.] To the most reverend Fader in Godkf ohn Archbishop of Caunterbury and Chaunceller of England. ~*5vt«». -^ * f n * 4 y j / /^ t *-^L. 'fa** ***} your continue!! i„ *t*^.*~*« Merely besechith 3*our good and gracious lordshyp you! orator Sebastian Giglis, merchaunt of Venyce, that where at the desire of your seid besecher and by his lettre writen unto one Reale, mar- cnaunt, the said Reale delivered to one Robt Welby, preste, XX. li. to the use of the seid Robt in his grete necessitie, and for suertie of paiement of the seyd XX li., the seid . . . made a bille unto the said Reale, subscribed with his owne hand to repaie ayen the seid XX. li. atte a day nowe past, and for defaute of paiement of the seid XX. li. Benet Bonnyre and Nicholas Michaell, merchaunts, and factours unto the seid Reale, commensed an action of XX. li. in London uppon the same bille, and theruppon the seid Robt was arested, and by his subtile meanes caused a writte to be had oute of the commen place, by meane of which writte he was removed, and there, in asmych as the seid bille was notte b} T hym enseled, he waged his lawe as an untrue Cristenman and so is delivered ; where nowe gracious lord the seid Benet and Nicholas purposen to have recovered of the seid XX. li. agenst }*our seid besecher, the which is without remedie at the comen lawe of this land without the gracious aide of your good grace to hym be shewed in this behalf, and to thentent to punysshe the seid Robt, as well for the seid perjurie as to compelle hym, accordyng to conscience, to satisfie his seid dutie : That it wold please your seid lordship, the premysses considered, to graunte a writte sub pena direct to the seid Robt. coramaundyng hym by the same to appere before the Kyng in his Chauncerie, there to abide the jugement of your seid lordship : this at the reverence of God and in the wey of charitie. m ANSWER This vs thanswere of Robt Welby, preste, to the byll of Sebastian Gylys. The seid Robt seith, that the seid byll is slaunderous, untrewe, and feyned and the mater therof is mater determynable after the cours of the comen lawe and not in this courte, as it appervd pleynly by the mater of the said byll, and for farder answere and pleyn declaracion of 584 GIGLIS V. WELBY. [CHAP. IIL the trouth touclryng the premysses the seid Robert seith, that Richard the thirde late Kynge of Inglond sent the seid Robt to Bryggys in Flaun- derous, there to tary for certen maters touchynge & concernjmge the same late Kyng ; and the same late Kyng causyd John de Gylys, than beyng collector unto ou re holy father the Pope, to purvey such weys and meanes as the seid Robt myght receyve at Bryggys before seide, such thyngs ans sumes of monej' as shuld be necessary for the seid Robt concernyng the seid maters and chargys, the seid John de Gylys delyv- ered a letter to the seid Robt, he to delyver the same unto the seid Reall specyfyed in the seid byll of the seid Sebastian, which letter the seid Robt delyvered to the seid Reall at Bryggys afore seid, by meane wherof the seid Robt receyvyed ther the seid sume of XX. li. to the use and for the maters of the seid late Kyng, and by the means a fore spe- cyfyed, and the seid Robt wrote a byll of resceyte of the seid sume, to thentent that the seid byll, wyth the seid odyr meanes, myght have ben a remembrans to the seid late Kyng for repayment of the seid sume of XX. li. ; with oute that, that the seid Robt resceyvyd the sume or wrote the seid byll to thentent to repaye it of his own prop}T money, and with owte that, that the seid Robt by subtyll meanes caused a wryte to be hadd oute the commen place, and ther wagyd his lawe in maner and fourme as b} T the seid bylle of the seid Sebastian is sub- rnytyd ; all which maters the seid Robt ys redy to averr and prove as this courte woll award, and prayeth to be dysmyssyd owte of this courte with his resonabyll costs and damages for his wrongfull vexacion in this behalfe. REPLICATION This is the Replicacion of Sebastian G3'les to the Answere of Robt Welby, preste. The seid Sebastian seith, that the seid Answere is insufficient and but mater subtily feyned & not materiall to be repbyed unto, neverthe- less for clere & pl^'iie trought & ferther replicacion to the seid an- swere he seith, that the seid Reale delivered to the seid Robt by the wey of lone the seid XX. li. to the only use of the same Robt Welby at his speciall prayer, requeste, & desire, 311 his grete nede, for repay- ment wherof the same Robt made the seid bille of XX. li. unto the seid Reale, and subscribed hit with his owne hande, redy to be shewed, and ferthermore the same Sebastian seith, yx\ all ttryngs as he in his seid bille of compleynt hath seid, whiche is gode & true yn every thynge therin specified, and determynable here yn this courte of Chauncerie ; with oute that, the seid Robt ever resceyved the seid XX. li. of the seid Reale, to thuse of the seid late Kyng Richard, or for eny maters of the same late Kyng, or en}^ other wyse, but onby to his owne use, as is afore by the seid Sebastian shewed ; and withoute that, the seid Popes collector ever purveyed eny weys or meanes that the seid Robt shulde rescej've the seid XX. li. of the seid Reale for eny suche causes as by the same Robt is allegged yn his seid answere, or for eny other ; SECT. IV.] GIGLIS V. WELBY. 585 all whiche maters & every of them the same Sebastyan is redy to paye as the court will awarde, and prayeth that the seid Robt may be com- pelled, by th' auctorite of this court, to pay the seid XX. li., as reason & gode conscience requyres yn that behalve. REJOINDER This is the Rejoyndyr of Robert Welby, preste, to the replicacion of Sebastian Gygles. The Seyde Robert seythe, alleggyth, averryth and prayth in all thyngs as he dyd in his seyde aunswer, withowte that, that the seyde Reale delivered to the seyde Robert by the wey of lone the seyde XX. li. specify ed in the bill of the seide Sebastian, to the oonly use of the same Robert Welby at the speciall prayer, request, and des\Te in his grete nede, and with that, that for repa}'ment of the same of his propur chergys the same Robert made the seyde by 11 of XX. li. unto the seid Reall, and subscribyd itt with his owne hande, in the maner and fourme as the seid Sebastian hath alleggyd. DECREE, RECORDED ON THE BACK OF THE BILL Memorandum quod quintodecimo die Maii anno regis Henrici septimi septimo ista peticione per infranominatum Sebastianum versus infra- scriptum Robertum coram dicto domino Rege in Cancellaria sua ex- hibita, ac responsione et replicacione aliisque probationibus in ex parte factis et in eadem Cancellaria apud westmonasterium, lectis, auditis et intellectis, habitaque superinde matura et diligenti deliberacione per reverendissimnm in Christo patrem Johannem Cantuari Archiepiscopum, Cancellarium Angliae et curiae cancellariae praedictae, pro eo quod infranominatus Robertus dictas viginti libras in infrascripta peticione specificatas se recepisse et habuisse confessus est, nullamque exonera- cionem sive persolucionem summae praedictae sive alicujus partis ejusdem in eadem Cancellaria probavit, nee causam aliquam raciona- bilem allegavit et probavit ex qua a solucione infrascriptae summae viginti librarum exonerari debeat, consideratum, adjudicatum, et de- cretum est quod dictus Robertus solvat seu solvi faciat infrascripto Sebastiano dictas viginti libras, juxta formam et effectum peticionis et confessionis praedioti. 1 1 The Maner of kepyng a Courte Baron (circa 1535), folio 32. Placita de pleqiis non acr/uietatis. Ceo vous monstre W. K. qui cy est et soy pleint de John E. qui illonques est que mesme cesty John luy nad pas acquite vers Thomas B. de Oxford xx. sh. as queux il fuit plegge pur ceo que le dit John vient ici a Oxfordea achater dun Thomas un piece de drap de layne pur les dits xx sh. a paier a la feste de noel donques prochin ensuant et pur la grender surety de payment des dits xx sh. le dit John pria le dit W que ore est plaintif destre son plegge / et le dit W. a sa pryer et requeste illonques devient son plegge a payer les dits xx. sh al dit Thomas a la feste suis dit, si le dit John ne paier point / a quel feste le dit John ne paier point ne paier ne voloit / mesque il ust este a ceo sovent requis / par quy le dit T. puis ad demande de le dit W la dit somme, et pur de- pute de paiment sur luy ad affirme un pleint de dette en la courte notre segniour le 586 rastell's entries. [chap. hi. RASTELL'S ENTRIES (FrRST Edition, 1566), Folio 160. A mercator stapule of the town of Galisie demands of C. merchant stapule of G. 8 /. which &c, for that by the custom of the city of London used and approved from time wherof memoiy of man runneth not to the contrary, if two three or more are bound within the citj T by an obligation of debt and each one in solido and one of them alone pays the whole debt or the whole debt is recovered against one of the obligors alone, then he who has so paid the whole debt or who is so cast in a judgment, may proceed against the other or others bound with him in the obligation b}' an action of debt jointly or severally for con- tribution so that each one of them shall pay %>ro rata according to the custom of the said city, and wheras on such a day and year &c in the parish &c, and ward &c the said A together with the said C by their certain writing bound themselves and each of them for himself for the whole and in solido to B a citizen and goldsmith of London in 16 Z good and lawful mone} T of England to be paid to the said B at such a day next to come after the date of the said writing, the said A, to wit, on such a day &c in the parish &c paid to the said B the said 16 I whereof the ratable proportion of the said C amounts to 8 7, whereb} 7 an action hath accrued to the said A to demand of the said C the said 8 I, now demanded according to the custom, which said 8 I the said C hath not- paid to the said A although often requested, to the damage &C. 1 roy en le Gyldhale devaunt le Maire Doxenford / par force de quel le dit W ad este som attache et distr par proces de ley de respondre en mesme la courte, et condempne en les dits xx. sh. et v. sh pur les damages et costages / et sovent en le mesme temps le dit W ad venu al dit John et luy requis pur luy acquiter vers le dit T. del plegage suis dit, mes il acquiter ne voloist, eins luy suffre estre vexe et condempne en defaute de sa non acquytaunce / a tort et as damages du dit pleintif xl. [xii. ?] d. etc. Defende tort et force etc. Sir, vous voies bien coment il ad monstre quil fuit nostre plegge, et quil est condempne en tiel court en xx. sh. et v. sh pur damages et costages, mes il nad mye dit que il paya pur nous nulle dener / et pur ceo jugement si sauns ceo aver suppose il dort accyon devers nous mainteiner. Querens. Sir, nous avons monstre coment nous sumus son plegge a sa request, et que nous avons este vexe et condempne par sa defaute de nous acquiter, et depuis que jugement sur ceo est rendu, le quel yl covient de fine force estre execute, a payer la quel le chose il nad mye dedit / pur quoy nous prions jugement et pur defaute de re- sponse que il soit atteint Curia. Saves autre chose dire ? Defendant. Nul. Curia. Donques cest courte agarde quele pleintiff recoura devers vous xx. sh et v. sh. en queux il fuit condempne pur vous / et XII. d. plus pur les costages et damages a cest courte et le defendant en la mercy etc. 1 This entry was cited by counsel in Shergold v. Bostwick, 1 Barnard. 142. In " The City Law or The Course and Practice in all manner of juridical Proceed- ings in the Hustings in Guild-Hall, London," englished out of an ancient French man- uscript, f. 42, which was published in 1647, is this statement : — " Where two or more are obliged within the City by obligation of debt, and every of them in the whole sum ; then if one of the obligees [obligors ? ] pay the whole, or he to whom the obligation is made, bringeth a suit in the same city, and recovers th« SECT. IV.] MORGAN V. SEYMOUR. 587 „ »-*j£_ OFFLEYjv, JOHNSON^, ^Vf -^ .„ -,, OFFLEYjv, JOHNSON^, "l/ In the Kims Bench, Easter Term, 1584. [Reported in 2 Leonard, 166, placitum 202. J Offlet and Johnson were bound as sureties with one A to B, who recovered against Johnson in London, and had execution against him ; and now Johnson sued Offle}', to have of him contribution to the said execution, ut uterque eorum oneretur pro rata, according to the cus- tom of London : Offley removed the cause by privilege into the King's Bench, whereupon came Johnson, and pra3 - ed a Procedendo ; _and be- cause upon this matter no action lieth by the course of the common law, ^g but onefy by custome in such cities, the cause was remanded ; * for oTTier-^ wise the piaint in suouia oe without remedy : See the BooTT of Entries, 160. ' ~ ¥ 'P MORGAN v. SEYMOUR In Chancery, before Sir Thomas Coventry, Lord Keeper, 1637. XT' [Reported in 1 Reports in Chancery, 120.] The plaintiff, with Sir Edward Seymour the defendant, being bound with Sir William St. Johns for the proper debt of the said St. Johns, to the defendant Rowland in a bond of £200 for the payment of £100, and the said Rowland sued the plaintiff only on the said bond, the plaintiff seeks to have the said Seymour contribute and pay his part of the said debt and damages, the said St. Johns being insolvent. This Court was of opinion, that the said Seymour ought to contribute and pa} r one moiety to the said Rowland, 2 and decreed Rowland to as- sign over the said bond to the plaintiff and Seymour to help themselves against the said St. Johns for the said Debt. *o l debt against one of the obligees [obligors ?] solely ; then he that hath paid the debt or is so condemned, may sue against the other obligees [obligors ?] by plaint or [of ?] debt, joyntly or severally to make contribution : so that every one shall pay his part, according to the usage of the City, saving reasonable answer to the parties." — Ed. 1 Anon., Moo. 136 cited, Arcord. — En. 3 Hole v.- Harrison, 1 Ch. Ca. 246, Finch, 15, 203, s. c, Accord. — Ed. v 588 WOLMERSHAUSEN V. GULLICK. t-4*~ *++ toimp:rsha^usen v. gullick. C^-/;*"" 1 ^/ Il^^HANCERY^^^^^WKIGIi^J., MAY 1. 1 isz*h£%n) *— S^kfimtyd in l^"kep sect. 37 of the act, and therefore a debt provable in the bankruptcy. if- £- Hardy v. Fothergill. 2 n - The principal defence of the other defendant is that the plaintiff is a " t -»- f ^ n o t entitled to maintain this act io n until she has paid more tha n her £cJ*^A-*-«2y7 proportion, or at any rate until she has paid her proportio n. The plaintiff is willing to pa}' her proportion, but she insists that the actual pa}-ment of it is not a condition precedent to her right to sue, and says that at any rate she is not obliged to pay the whole in the first instance and then sue for reimbursement. If she is obliged to pay the whole before actual contribution from the co-surety, the business in which the testator's assets are invested will be embarrassed b}* the withdrawal of so much of the capital even for a short time. Obviously if a man were surety with nine others for £10,000, it m ight be a ruinous hardship if he were compelled to raise the whole £10,000 at once and per haps~to pay interest, on the £9,000 until he could recover the £9,000 by act ions or debto r summonses against his co-suretie s. The questions are whether the action can be maintained, and what is the precise extent of the relief (if any) which can be given. Ety the Roman law, as it stood in the time of Justinian, sureties had, generally speaking, a right to compel the creditor to enforce payment against them pro rata only. The Superior Courts of common law in this coun- try have never entertained any action for contribution by a surety 1 Only the opinion of the Court is given. — Ed. 2 13 App. Cas. 351. SECT. IV.] WOLMERSHAUSEN V. GULLICK. 589 against his co-surety, except the action for money paid, and from the time of Davies v. Humphreys, which was decided in the year 1840, it has been treated as settled law that the surety cannot maintain this action until he has actually paid more than his own proportion, because this action assumes a debt due and payable to the plaintiff, and there is no legal debt due and payable, and the creditor may yet enforce pay- ment of the whole balance from the co-surety. Nor did the courts of common law ever give in the case of co-sureties the equitable relief which they were accustomed to give in man}' other cases of joint or common liability, by compelling contribution after judgment and before execution by means of a writ of audita querela or scire facias to limit the creditor's execution to the proper share payable by the particular defendant. This will be seen from the collection of ancient cases in 3 Rep., pages 12 and following. By the custom of the city of London an equitable action lay in the city courts by a surety before he had paid anything to have it ordered that he and his co-sureties should be charged 2 yro rata only — " ut uterque eorum oneretur pro rata." Offley and Johnson's Case (26 Eliz.). In the earliest reports and abridgments of cases in Chancer} 7 , there is frequent mention of contribution, but there seems to be no reported instance of contribution between sureties before the 17th century, and even in modern times there is very little express authority that the surety has an}' remedy until he has actually paid too much, and still less authority to show the precise extent of the relief to which he may be entitled before such payment. In nearly eveiy reported case the surety had before action paid more than his share. Nearly every case and text-book refers to his right to contribution as the right of a surety who has paid more than his proportion. In a few cases the ambiguous expression is used, " when he is called upon to pay more than his proportion." The following are, I believe, the only reported cases which throw any light on the subject. I begin with two, which are not cases of suretyship, but which illustrate a principle of equity apparently estab- lished in other cases of contribution and applicable to this. They are cited in Vin. Abr., tit. Contribution, from Cary's Reports. " (27.) If a man grants a rent-charge out of all his lands, afterwards sells his lands by parcels to divers persons, and the grantee of the rent will from time to time levy the whole rent upon one of the purchasers only, he shall be eased in Chancer}' by a contribution from the rest of the purchasers, and the grantee shall be restrained by order to charge the same upon him only." " (28.) Sir Edmund Morgan married the widow of Fortescue, he had his wife's lands distrained alone by the grantee of a rent-charge from her former husband, and therefore sued the grantee in Chancery, to take a rateable part of the rent, according to the lands he held subject to the distress, and notwithstanding the Lord Chief Justice Popham's 590 WOLMERSHAUSEN V. GULLICK. [CHAP. III. Report, who thought this reasonable, the Lord Chancellor Egerton would give him on this bill no relief, but ordered that he should exhibit his bill against the rest of the tenants and grantee both, the one to show cause why they should not contribute, the other why he should not accept of the rent equally ; otherwise, it was no reason to take away the benefit of distress from the grantee, which the law gave him." Three cases of contribution between sureties in the time of Charles I. are reported. In Peter v. Rich, t he principle was establishe d that in equit}', if one of several co-sureties is insolvent, the others contribute as if he had not bee n a sure ty. There the plaintiff had paid the wllole. In Morgan'*'. Seymour, the principle upon which the above-cited cases from Cary, and the subsequent leading case of Deering v. Earl of Win- chelsea, were decided seems to be applied in the fullest extent to the case of co-sureties, the principal creditor being made a party to the suit and the co-surety being ordered to pay direct to the creditor. The report is as follows : — " The plaintiff, with Sir Edward Seymour, the defendant, being bound with Sir William St. Johns for the proper debt of the said St. Johns, to the defendant Rowland in a bond of £200 for the pay- ment of £100, and the said Rowland sued the plaintiff only on the said bond, the plaintiff seeks to have the said Seymour contribute and pay his part of the said debt and damages, the said St. Johns being insol- vent. This Court was of opinion that the said Seymour ought to con- tribute and pa} - one moiety to the said Rowland, and decreed Rowland to assign over the said bond to the plaintiff and Seymour, to help themselves against the said St. Johns for the said debt." In Swain v. Wall, the plaintiff surety had paid the whole of the cred- itor's demand, and the only point decided was that his claim for contri- bution might be controlled b} r express contract. In Hole v. Harrison (1673), 1 the rule in Peter v. Rich was followed. In 1786, in Lawson v. Wright, 2 the plaintiff co-surety had paid off the whole liability, and he sued for contribution. Sir Llo3'd Kenyon said that it had been established ever since the origin of the courts of equity that one surety had a right to call upon another for contribution in cases of this nature. The only question was whether proof of payment by the surety was enough without proof that the principal debtor was insolvent. The arguments seem to show that counsel and the Court thought that an action could be maintained b}' a surety before he had paid anything, if he could prove the principal debtor to be insolvent. In 1787 the leading case of Deering v. Earl of Winchelsea was decided in the Ex- chequer as a court of equity by Lord Chief Baron Eyre. There a surety by bond for £4,000 to the Crown had had judgment against him at the suit of the Crown for nearly the whole amount, and he filed his bill for contribution against sureties bound by distinct bonds to the same creditor to secure the same liability of the same debtor, and the 1 1 Ch. Ca. 246 ; Finch, 15, 203. 2 1 Cox, 275. SECT. IV.] WOLMERSHAUSEN V. GULLICK. 591 only point reported as argued or decided was whether there should be contribution between sureties bound under distinct contracts of surety- ship without privity of contract between themselves. After deciding that the right to contribution depends primarily, not upon contract, but upon the equitable principle that " in equali jure the law requires equality — the charging one surety discharges the other, and each therefore ought to contribute to the onus," the Court proceeded to declare the plaintiff's right to contribution, and ordered the other sureties to pa}' their shares to the creditor. No similar order is to be found in an}' other case of sureties except Morgan v. Seymour. But it is in strict accordance with the principle of the cases cited from Cary, and it is hardly possible to suppose that so obvious and impor- tant a matter as the jurisdiction to make such an order could have been overlooked. It appears, from the report of the case in 2 Bos. & P., though not from the report in 1 Cox, that the Crown as creditor was made a defendant to the bill under the name of the Attorney-General ; and there could not have been any object in this except that the Crown should be controlled and prevented from enforcing its legal right in- equitably against one alone of the sureties. That nothing so impor- tant was overlooked may be inferred from the remarkable observations of Lord Eldon, who had himself argued the case, and who said, in Craythorne v. Swinburne (1807) : — " In the case of Deering v. Earl of Winchelsea, which, I recollect, was argued with great perseverance, ... it is decided that, whether they are bound by several instruments, or not, whether the fact is or is not known, whether the number is more or less, the principle of equit}' operates in both cases ; upon the maxim, that equality is equity : the creditor, who can call upon all, shall not be at liberty to fix one with payment of the whole debt ; and upon the principle, requiring him to do justice, if he will not, the Court will do it for him. ... I argued that case ; and was much dissatisfied with the whole proceeding, and with the judgment; but I have been since convinced that the decision was upon right principles. L ord Chief Justice Eyre in that case decided that this obligation of co-sureties is not founded in contract: but stands upon a principle of equity ; and Sir SVHomilly has very abl}' put, what is consistent with every idea, that, after that principle of equity has been universally acknowledged, then persons, acting under circumstances to which it applies, may properly be said to act under the head of contract, implied from the universality of that prin- ciple. Upon that ground stands the jurisdiction assumed by courts of law. . . . The doctrine of contribution . . . stands upon this; that all sureties a re equally liable to the creditor ; and it does not rest wj th him to determi ne upon whom thebu rden shall be throw n exclusiv ely ; t hat equality is equ ity ; an d, if he will not make them contribute equally , this Court will finally, by arrangemen t, sec ur e that ob ject." Several cases of contribution between sureties occur in the books in Lord Eldon's time, but in none of them is there any reference 592 WOLMERSHAUSEN V. GULLICK. [CHAP. III. to the point in question. In Ex parte Gifford (1802) Lord Eldon said : — " The principal is to discharge all the obligations of all the sureties : but they stand with regard to each other in a relation, which gives rise to this right among others ; that, if one pays more than his proportion, there shall be a contribution for a proportion of the excess beyond the proportion, which in all events he is to pay.'' In Craythorne v. Swinburne, alreacby cited, Lord Eldon states the right of the surety in these terms : "It has been long settled, that, if there are co-sureties by the same instrument, and the creditor calls upon either of them to pay the principal debt, or an}' part of it, that surety has a right in this Court, either upon a principle of equity, or upon contract, to call upon his co-surety for contribution." In Antrobus v. Davidson (1817), 1 it was held that the creditor can- not bring an action jgpia timet against a surety to force him to set apart money to provide for the possibility of a debt becoming due from the principal debtor. In 1821, in Stirling v. Forrester, 2 in the House of Lords, Lord Redesdale said: "The principle established in the case of Deering v. Lord Winchelsea is universal, that the right and duty of contribution is founded in doctrines of equity ; it does not depend upon contract. §Ti / t4 TJ£L If several persons are indebted, and one makes the payment, the creditor is bound in conscience, if not b}' contract, to give to the -• ***** party paving the debt all his remedies against the other debtors. The cases of average in equity rest upon the same principle. It would be against equity for the creditor to exact or receive payment from one, and to permit, or by his conduct to cause, the other debtors to be exempt from payment. He is bound, seldom by contract, but always in conscience, as far as he is able, to put the party paving the debt upon the same footing with those who are equally bound. That was the principle of decision in Deering v. Lord Winchelsea. . . . The ques- tion depends upon equity, not upon contract ; and in this case a con- tract is to be implied. The decision in Deering v. Lord Winchelsea proceeded on a principle of law which must exist in all countries, that where several persons are debtors, all shall be equal." In 1861, in Reynolds v. Wheeler, which was an action for money paid, Erie, C. J., said: "If one surety is called on to pay the whole debt he is entitled to have contribution from his co-surety," and Wil- liams, J., said : " It is now well established by many cases that where two parties stand in the relation of co-sureties, and one of them is applied to for more than his share, he is entitled to call upon his com- panion for reimbursement." But having regard to the common law, as settled b}- Davies v. Humphreys, it seems plain that these expres- sions must be understood as assuming actual payment by the plaintiff of more than his share. In 1868, in Wooldridge ?•. Norris, 8 executors of a surety obtained l 3 Mer. 569. 2 3 Bli. 575, 590, 596. 3 Law Rep. 6 Eq. 410. SECT. IV.] WOLMERSHAUSEN V. GULLICK. 593 an order for indeinnit}- and payment by a person who had covenanted to indemnify the testator against his liability as surety, although the executors had not paid or been sued. The judgment, however, pro- ceeded on the particular terms of the covenant. In the same year, in Cruse v. Paine, 1 where a vendor of shares was entitled to be indemnified by his vendee against calls, Lord Hatherley declared the liability of the vendee for future calls, and ordered him to indemnify the vendor's estate, and to procure its release or discharge " either by payment of the calls or otherwise, with liberty to apply in Chambers, &c." In 1872, in Bechervaise v. Lewis, Willes, J., said: "The surety, ... as soon as his obligation to pay is become absolute, has a right in equity to be exonerated by his principal." In 1874, in Lace}- v. Hill,' 2 upon a creditor's claim in an administra- tion, Jessel, M. R., said : — " Whatever may be the case at law ... it is quite plain that in this Court any one having a right to be indemnified has a right to have a sufficient sum set apart for that indemnit}-. It is not very material to consider whether he is entitled to have that sum paid to him, or whether it must be paid direct over to the creditor. If the creditor is not a part}-, I believe that it has been decided that the party seeking indem- nity may be entitled to have the money paid over to him." In 1877, in Lloyd v. Dimmack, 3 Mr. Justice Fry refused to declare prospectively the right of the assignor of a long lease to indemnity against future breaches of covenant by the assignee, and in Hughes- Hallett v. Indian Mammoth Gold Mines Compan}-, 4 the same learned judge refused to make an order quia timet against a person for whom the plaintiff held shares to indemnify the plaintiff, there being no evi- dence that calls were likely to be made, but said: "There have been, undoubted 1} T , cases in which, where a contract for indemnity existed, and a right to sue upon that contract had arisen, the Court has declared the right to indemnity generally, and has put matters in such a train that, when the subsequent right to indemnity should arise, the indem- nity might be worked out. Some forms of judgments in that class of cases are to be found in the last edition of Seton on Decrees, and they show that where a person has taken shares for another, and a call has been made which has not been met by the person liable to pay it, the trustee who is entitled to an indemnit}- may obtain a declaration of his title generally, and may possibly obtain libert}' to apply from time to time to work it out." So, in the similar case of Hobbs v. Wayet, 5 where a call on shares was also threatened, Mr. Justice Kekewich made a declaration of the right to indemnity. The preceding cases from Cruse v. Paine, 6 downwards, have been l Law Rep. 6 Eq. 641 ; 4 Ch. 441. « Law Rep. 18 Eq. 182, 191. 3 7 Ch. D. 398. * 22 Ch. D. 561, 565. 5 36 Ch. D. 256. 6 3 Law Rep. 6 Eq. 641 ; 4 Ch. 441. 38 594 WOLMERSIIAUSEN V. GULLICK. [CHAP. III. referred to, not as having any direct bearing on the rights of co- sureties, but as throwing some light on the nature and extent of the relief which can be given in equity in analogous matters. There are only two remaining authorities. In 1881, in Ex parte Snowdon, 1 a surety who had paid his own share and no more, and who had not been called upon to pay more, issued a debtor's summons against his co- surety for half of what had been paid, and he obtained an adjudication of bankruptcy, which the Court of Appeal annulled on the ground that, until a surety had paid more than his share, there is no legal or equi- table debt to sustain bankruptcy proceedings. Lord Justice James is reported to have said : " I think your proper remedy is to call on Snowdon to pay the bank £541. ... I believe the proper course when a surety is called upon to pay a part of the whole debt for which he is liable would be to bring an action against his co-sureties to com- pel them to contribute to pay the debt to the creditor, just as he would be entitled to call on them for contribution if he had been sued by the creditor, asking that he should be indemnified by his co-sureties against paying the whole debt, or whatever risk he ran." The report in the Law Journal 2 is as follows : " The proper course when a surety is called upon to pay the whole debt, for which he is liable with his co- surety, is to call upon his co-surety for contribution and to indemnify him against paying the whole ; and the only mode in which in equity you can compel a co-surety to pay his proportion of the debt is to show that you have paid 3'our proportion, or more than your propor- tion, of the debt, and are liable for the residue." In the Weekly Re- porter 3 it is, " The proper course when a surety is called upon to pay the whole debt for which he is liable would be to call upon his co- sureties for contribution, just as he would be entitled to have done if a bill had been filed against him hy the principal creditor, asking that he should be indemnified against paying the whole." In 1883, in Mac- donald v. Whitfield, 4 Lord Watson, pro cur., declared the right to con- tribution of a surety who had not paid, but had had judgment against him, in this form, " Entitled and liable to equal contribution inter se." In Lord Justice Lindlej-'s work on Partnership, 5 it is observed that " before the passing of the Judicature Acts, a right to contribution or indemnity, arising otherwise than by special agreement, was only en- forceable at law b} T a person who could prove that he had already sus- tained a loss. But in equity it was very reasonably held, that even in the absence of any special agreement, a person who was entitled to contribution or indemnity from another could enforce his right before he had sustained actual loss, provided loss was imminent ; and this principle will now prevail in all divisions of the High Court. There- fore a person who is entitled to be thus indemnified against loss is not obliged to wait until he has suffered, and perhaps been ruined, before 1 17 Ch. D. 44, 46, 47. 2 50 L. J. Ch. 540, 541. 3 29 W. 11. 654. 4 8 App. Cas. 733, 750. 5 5th ed. p. 374. SECT. IV.] WOLMEKSHAUSEN V. GULLICK. 595 having recourse to judicial aid. Thus, in the ordinary case of prin- cipal and surety, as soon as the creditor has acquired a right to imme- diate payment from the surety, the latter is entitled to call upon the principal debtor to pay the amount of the debt guaranteed, so as to relieve the surety from his obligation ; and where one person has covenanted to indemnify another, an action for specific performance may be sustained before the plaintiff has actually been damnified; and the limit of the defendant's liability to the plaintiff is the full amount for which he is liable ; or if he is dead or insolvent the full amount provable against his estate, and not only the amount of dividend which such estate can pay. In strict conformity with these principles, part- ners and directors who are individually liable to be sued on bonds and notes, which as between them and their copartners are to be regarded as the bonds and notes of the firm or company, are entitled to call for contribution before these bonds or notes have been actually paid. So a trustee of shares liable to calls is entitled to be indemnified b} r his cestui que trust against them before they are paid." This statement of the law is an authority in favor of the view that some relief can be given, but it does not specify the form or limit of the relief; nor do any of the authorities cited in the notes throw any further light on the mat- ter. Nor have I been able to obtain assistance from English or Ameri- can writers on equity or on the law of suretyship. The plaintiff's difficulties have been increased by this, that an application by her for leave to use the third party procedure ordinarily applicable in cases of contribution or indemnity was refused in the administration action on the ground that the procedure is not available in an administration action. And even if the question had arisen upon third party pro- cedure, neariy the same difficulties would have occurred. In this state of the authoriti es I think that, if th e plaintiff had made the credi tor a de fendant to the present action, I ought to h ave field that the allowance of the principal creditor's claim in the administration action was equivalent to a .judgment against the plaintiff lor the w hole amount of the guarantee, and that on the precedents of Morgan v. Seymour and Deering v. Earl of Winchelsea, the plaintiff would have been entitled to a declaration of h er right to contribution and to an order upon the solvent co-surety to pa}^ h is proportion t o th e princip al creditor. TMe princi pal creditor "not being a party, I think that I can- not order payment to him or dir ectly prevent him from en forcing his judgment against the plaintiff alone. Nor can I at present order the c6-suretv to pay his halt to the plaintiff, for the plaintiff cannot give him a discharge as against the principal creditor, and this case is not like the case of a plaintiff who merely claims indemnity, as in the cases referred to by Jessel, M. R., in Lacey v. Hill, 1 in which no question arises as to any other part)'. But I think that I can declare the plain- tiffs right, and make a prospective order under which, whenever she has paid any sum beyond her share, she can get it back, and I there- i Law Rep. 18 Eq. 182, 191. 596 RANELAUGH V. HAYES. [CHAP. III. fore declare the plaintiff's right to contribution, and direct that, upon the plaintiff paying her own share, the defendant Gullick is to indem- nify her against further payment or liability, and is, by payment to her or to the principal creditor or otherwise, to exonerate the plaintiff from liability beyond the extent of her own share. The plaintiff must have liberty to apply in chambers and generally to apply. A point was made as to the Statutes of Limitation. The principal creditor's claim was put in in 1879. But I think that I must hold that, even if the statute can begin to run before the surety has paid more than his proportion, at any rate it does not run until his liability is ascertained, and that did not occur until 1890. There was another point made that the plaintiff ought to have proved against the estate of the co-suret}' Patton, but if that were so, so might the defendant Gullick. It is agreed that, if such proof could have been and had been made, it is to be taken that £200 would have been re- ceived. I think that the plaintiff and defendant should each bear half of this, and the defendant's liability to the plaintiff will be reduced accordingly by $100. I think that the plaintiff acted reasonably and in the interest of all parties in resisting and reducing the principal creditor's claim, and that the defendant ought in equity to contribute half the costs of those proceedings. See Kemp v. Finden ; l Lawson v. Wright ; 2 Hole v. Harrison. 3 I therefore give judgment in that form in favor of the plaintiff, _with costs. 4 Vyi—r ^L COMES RANELAUGH fl^AYE&A " — -> In Chancery, ^before Lord Sjil ford , Keeper, October 30, 1683. ^^ ^[Reported in 1 Vernon, 189.;] The Earl of Ranelaugh assigns several shares of the excise in Ireland to Sir James Hayes, and Sir James covenants to save the Earl harmless in respect of that assignment, and to stand in his place touching the pa3 7 ments to the King, and other matters, that were to have been per- formed by him. The plaintiff the Earl of Ranelaugh suggests in his bill, that he is sued by the King for £20,000, and that the defendant Sir James Hayes by the agreement ought to have paid it ; and therefore prays the defendant may be decreed to perform the agreement in specie. It was insisted for the defendant, that here was no proper subject for equit}', nor anything that the Court could decree ; for here was no 1 12 M. & W. 421. 2 i Cox, 275. 3 1 Ch. Ca. 246; Finch, 15, 203. 4 McKenna v. Witherspoon, 2 Rich. Eq. 20, Accord. To the same effect are Hyde v. Tracy, 2 Day, 491, Hodgson ?\ Baldwin, 65 111 532, in which cases no judgment had been obtained against the surety by the creditor — Ed. < » \<*. t * SECT. IV.] RANELAUGH V. HAYES. 59? specific covenant, but only a general and personal covenant for indem- nity ; and that was not decreeable in equity ; for it sounds only in damages, which cannot be ascertained in this court; especially as this case is, there being no breach of the covenant assigned in the bill ; for a suit being brought by the King, that is not in itself any breach, for the defendant cannot prevent that. He will defend the suit, and if nothing is recovered there is no breach. But the Lopd Keeper in this case thought fit to decree that Sir James should perform his covenants ; and directed it to a Master, and that toties (fuoties any breach should happen, he should report the same specially to the Court ; and the Court then might, if there should be occasion, direct a trial at law in a quantum dqmnificatus ; 1 and he con- ceived it reasonable, that Sir James Hayes should be decreed to clear the Earl of Ranelaugh from all these suits and incumbrances within some reasonable time. An d he compared it to the case of a c ounter- bond ; where although the surety is not troubled or molested for the debt, yet a£ any time after the money becomes payable on the original rx md, this C ourt will decree the principal to discharge the debt ; 2 it being unreasonable that a man should alwa}*s have such a cloud hang over mm. 1 The opinion of the Lord Keeper as to future hreaches has heen overruled. Lloyd r. Dimmack, 7 Ch. D. 398, 401 ; Hughes- Hallett v. Indian Co., 22 Ch. D. 561. — Ed. 2 Lee v. Rook (1730) Mosely, 318 (semble per Sir Joseph Jekyll, M. R.) ; Nisbet v. Smith (1789), 2 Bro. C. C. 578, 582 (semble); Antrobus v. Davidson, 3 Mer. 569, 579 (semble per Sir William Grant, M. R.) ; Pad wick v. Stanley, 9 Hare, 627, 628 (semble per Sir George Turner, V. C.); Wooldridge v. Norris, 6 Eq. 410; Lloyd v. Dimmack, 7 Ch. D. 398; Mathews v. Saurin, L. R. 31 Ir. 181, Accord. In Nisbet v. Smith, supra, Lord Thurlow said : " It is clear and never has been dis. puted that a surety, generally speaking, may come into this court, and apply lor "the purpose of compelling the principal debtor tor whom he is surety to pay in the money and deliver him from the obl igati on/' To this remark of Lord TliurftTw. Mr. Belt makes the following note : " But it must be observed that a bill will not lie upon any general equity by a surety against the principal debtor, to have an indemnity, or to have the money paid into court, where no further time has been given, where the day of payment has not elapsed, and the surety has not been damnified, or is not in evident danger of being so ; or unless a distinct agreement can be proved that it should be done whenever the plaintiff called on him for it. So decreed, per totam curiam, in the Ex- chequer, Trinity Term, 1808, 4th July, Dale and Perry v. Lolley, where the bill was dis- missed with costs. And the Court held that Lord Thurlow's allusion, in this place, to the surety's equity, is applicable only to the above, and that any other decision would quite overthrow the very reason of a party's becoming surety at all, and be absurd. " Such a bill lias been filed and a decree made, which ought never to have been done ; and Lord Eldon, C, observed it was a strange and anomalous decree. The cause was Clarke v. Stamford, Chancery, 16th June, 1801, and the master's report, 25th June, 1802. The decree was according to the prayer, that the principal should pay the debt and discharge the plaintiff as surety. The obligee was a party, and acted upon the decree. This was observed as above per Lord Eldon, G, 26th May, 1803, first seal after Easter Term, upon a motion by Mr. Hollist in the above cause. [Mr. Hollist saying that, in fact, such a decree ought never to have been made.] " /. 598 DOBIE V. FIDELITY AND CASUALTY CO. [CHAP. IIL DOBIE, Respondent, v. FIDELITY AND CASUALTY CO., Appellant. In the Supreme Court, Wisconsin, March 16, 1897. [Reported in 95 Wisconsin Reports, 540.] Newman, J. 1 The question presented is whether the complaint states a cause of action. The action is by a surety to compel his prin- cipal to pay the debt for which both are liable, for the exoneration of the surety. It is ultimately the defendant's liability. That party is the principal debtor, who is ultimately liable for the debt. The ques- tion is whether a surety can, in equity, compel his principal to exoner- ate him from liability, by extinguishing the obligation, without having first paid it himself. It seems to be well settle d that a surety against whom a judgment has been rendered may, without making payment himselr, proceed in equity against his principal to subject the estate of the latter to t he payment of the debt, in exoneration of the surety. 3 2 Beach, Mod. Eq. Jur. § 903 ; 3 Pomeroy, Eq. Jur. § 1417; Wiflard, Eq. Jur. 110 ; United N. J. R. & C. Co. v. Long Dock Co ; 3 Beaver v. Beaver ; 4 Gibbs v. Mennard ; 5 Warner v. Beardsley. 6 By the Court. The judgment of the Circuit Court for Douglas county is affirmed. 1 Only the opinion of the Court is given. — Ed. 2 It is generally agreed in this country that_ihe surety may file a bill against the principal, as soon as the obligation matures, to compel Trim to exonerate the "sTirety y pa\Ti7g*tlie creditor. Dennis v. Rider, 2 McL. 451,-456 (semble); Merwin v. Austin, 58 Conn. 22, 24 \semble) ; West v. Chasten, 12 Fla. 315; Ilaydeu v. Thrasher, 18 Fla. 795; Macfie v. KilaueaCo., 6 Hawaiian, 440; Moore v. Topliff, 107 111. 241 (semble) ; Street v. Chicago Co., 157 111. 605 ; Roberts v. American Co., 83 111. Ap. 469 ; Reach v. Hamilton, 84 111. Ap. 413; Ritenour v. Mathews, 42 Ind. 7, 14 (semble); Medsker v. Parker, 70 Ind. 509 ; Hoppes v. Hoppes, 123 Ind. 397 ; Morrison v. Poyntz, 7 Dana, 307, 308 (semble) ; Meador v. Meador, 88 Ky. 217 ; Hoffman v. Johnson, 1 Bland, 103, 105 (semble) ; Whit- ridge v. Durkee, 2 Md. Ch. 442 (semble) ; Bellows v. Lovell, 5 Pick. 307, 310 (semble) ; Huey v. Pinney, 5 Minn. 310, 322 (statutory) ; Irick v. Black, 17 N. J. Eq. 189, 195 (semble) ; Delaware Co. v. Oxford Co., 38 N. J. Eq. 151 (semble) ; Warner v. Beardsley, 8 Wend. 194, 199 (semble) ; Gibbs v. Mennard, 6 Paige, 258 (semble) ; Marsh v. Pike, 10 Paige, 595 ; Haunay v. Pell, 3 E. D. Sm. 432 ; Ferrer v. Barrett, 4 Jones, Eq. 455 (semble) ; Miller v. Miller, Phill. (N. Ca.) 85, 88 (semble) ; Thigpen v. Price, Phill. (N. Ca.) 146 ; Taylor v. Miller, Phill. (N. Ca.) 365 (semble) ; Stump v. Rogers, 1 Oh. 533 ; McConnell v. Scott, 15 Oh. 401 ; Hale v. Wetmore, 4 Oh. St. 600; Beaver i>. Beaver, 23 Pa. 167 (semble) ; Ardesco Co. v. N. A. Co., 66 Pa. 375 (semble) ; Pride v. Boyce, Rice, Eq. 275 ; Norton v. Reed, 11 S. Ca. 593 ; Hellams v. Abercrombie, 15 S. Ca. 110 (semble) ; Washington v. Taite, 3 Humph. 543, 546 ; Howell v. Cobb, 2 Cold. 104 ; Greene v. Starnes, 1 Heisk. 582 ; Saylors v. Saylors, 3 Heisk. 525 (but see Gilliam v. Esselman, 5 Sneed, 86) ; Bishop v. Tait, 13 Vt. 81 ; Neal v. Buffington, 42 W. Va, 823 ; Harris v. Newell, 42 Wis. 687, 691; Mathews v. Saurin, L. R. 31 Ir. 181.— Ed. 8 38 N. J. Eq. 142. * 23 Pa. St. 167. 5 6 Paige, 258. 6 8 Wend. 194; 7 Am. & Eng. Encyc. of Law, 486, cases in note. SECT. IV. J _vv RICHARDSON V. MERRIT'L "'599 WILLIAM E. RICHART)SON v. LEONIDAS MERRITTT ^^^^int'iiE" Supreme Court, Minnesota, November 80, 1898. [Reported in 74 Minnesota Reports, 354.] «* — t^f^ '^vt-*^^^ - j ^-r ^ "I Canty, J. 1 From April 12, 1893, to July 11, 1894, defendant/^ ^ indebted to the American Loan & Trust Company in the sum of $3,000, for which it held his promissoiy note. On the latter day the trust com- ^fl+~,AoJL pany, being insolvent, made an assignment under the insolvency law for the benefit of all its creditors. The assignee accepted the trust, qualified, and brought this action to recover the amount of the note. The defendant in his answer admitted the making of the note, and alleged that on April 16, 1892, the trust company as principal, and he and other persons as sureties, executed to the county of St. Louis a „ bond, and that an action has been brought against him and the other ^* sureties on the bond to recover the sum of $106,000. *S On the trial, the Court found that the bond was executed to secure the payment of such moneys of said county as should be deposited with the trust compan}' within the period prescribed in the bond, and that said other action was brought to recover the sum of $106,141.08, the same being the balance claimed by the county to be due it from the trust company for county funds so deposited with it pursuant to the designation of it as a depositary of county funds under the bond. The Court ordered judgment for plaintiff herein for the full amount due on the note, and from an order den}*ing a new trial defendant appeals. Appellant contends that the facts found by the Court, as above stated, constitute an equitable defence to the action. We cannot so hold. We are of the opinion that the facts so found gave defendant a r ight to "a stay ot proceedings until a reas onable time had "el apsed to /fcL-^^l enable him to have his liabili ty on' the T>ond determined, and to pay " — ~sr~ tue amount ac rjucigeq against him thereon, and plead such fact" of ( / payment in a supplemental answer in this action . ■"""• " But defendant never made before trial any motion for a stay of proceedings in this action. On the contrary, he went to trial on the merits without objection. After he had paid the amount for which he is liable to the county on the bond, or any part thereof, he would have an equitable defence on the merits for the amount so paid, even though it was paid after this action was commenced. 2 Cosgrove v. McKasy ; Thompson v. McClelland ; 3 Beaver v. Beaver ; * Brittain v. Quiet. 5 1 Only the opinion of the Court is given. — Ed. 2 Tuscumbia Co. v. Rhodes, 8 Ala. 206 ; Brittain v. Quiet, 1 Jones, Eq. 328 ; Beaver v. Beaver, 23 Pa. 167 ; Thompson v. McClelland, 29 Pa. 475 ; Baily's Est., 156 Pa. 634, 641, Accord. —Ed. Tyree v. Parham, 66 Ala. 424, Cmdra. 3 29 Pa. St. 475. * 23 Pa. St. 167. 5 54 jj. Ca. 328. 600 RICHARDSON V. MERRITT. [CHAP. III. But if, by reason of his being a surety on the bond, he has, without making any payment as such surety, a complete defence to this action, and every action brought by plaintiff, he may escape liability- on the note and the bond both, and thereby be $3,000 ahead. He ma}' suc- ceed in preventing a final determination of his liability on the bond until the statute of limitations has run against the note, and then it maj T turn out that he is not liable on the bond at all. In the meantime, no action can be maintained on the note, and the insolvent estate of the trust company must remain unsettled, perhaps for years. If the equity for which defendant contends is a defence on the trial, it must be as a plea in bar, which entitles him to judgment on the merits, or a plea in abatement, which entitles him to have the action dis- missed. In our opinion, it is neither. He has certain equit able rights, to protect which, under the old p ractice, a bill in equity would lie to enjoin the prosecution of this action until a sufficient time had elapsed for him to determine his liability as surety on tne Dond. . But a tempo- ran' injunction only would i ssue for this purpose,~and , after he had paid the amo unt of his liability as surety , a final hearing would be had, a nd a permanent injunction would then iss ue. Mattingly v. Sutton. 1 This is a well-recognized equitable right. 2 Brandt, Sur. § 227. Of course, if it was determined that he owed nothing as suret}', or owed less than the amount claimed to be due from him to his insolvent principal, the temporary injunction would be dissolved or modified ac- cordingly, and the action so enjoined would proceed to a final determi- nation. The practice of issuing such an injunction is now abolished, and, under our code practice, the office of the temporary injunctiorTis performed by an order in tne actio n staying proceedings before "trial. Instead of the tinal hearing for a permanent injunction, the defendant should file a supplemental answer, alleging that he has paid the amount of his liability as surety, or so much thereof as is sufficient to offset the amount due plaintiff, and then proceed to trial. It will thus be seen that, neither under the present practice nor the old common-law and equity practice, should the action terminate until defendant's liability as surety was determined, and, if he was held liable, until he had paid enough to offset the claim of his insolvent principal against him. But, of course, if he does not use reasonable diligence to bring about this result, the stay of proceedings ma}- be vacated. Defendant has proceeded in this case on the theory that he had a right to urge on the trial an equit}^ which, if sustained, should have postponed the trial, — an equity which, for the present, should prevent 1 19 W. Va. 19 (see page 35). 2 Sims v. Wallace, 6 B. Mod. 410 ; Abbey v. Van Campen, Freem. Ch. (Miss.) 273 ; Williams v. Helm, 1 Dev. Eq. 151 ; Battle v. Hart, 2 Dev. Eq. 31 ; Walker v. Dicks, 80 N. Ca. 263 ; Scott v. Timberlake, 83 N. Ca. 382 ; Ross v. McKinney, 2 Rawle, 227 ; Beaver v. Beaver, 23 Pa. 167; Feazle v. Dillard, 5 Leigh, 30; Mattiugly v. Sutton, 19 W. Va. 19, Accord. — Ed. SECT. IV. J COSGROVE V. McKASY. 601 a trial without abating the action. This course is approved in Walker v. Dicks, 1 but in that case the defendant had paid on his liability as suret}- more than sufficient to offset the amount due from him to his insolvent principal, so that on this point the opinion is merely obiter. However, the same doctrine was laid down in Scott v. Timberlake, 2 where the surety had paid nothing. We cannot follow these cases. 3 We are of the opinion that the remedy is by motion to stay proceed- ings before trial, not to prove on the trial an alleged defence, which should have no effect but to postpone the trial. But we are of the opinion that the trial court might yet, in its discre- tion, stay proceedings until this defendant's liability as surety is de- termined, with a view to further proceedings to be instituted by supplemental pleadings, and the introduction of further evidence there- in, when defendant's liability as surety is determined. In that case the issues already tried would be disposed of, the findings already made would stand, and the case would remain open a reasonable time for further issues, and a trial thereon, when such liability as surety was determined. The order appealed from is affirmed, with leave to defendant to apply to the Court below so to stay proceedings and open the case. J. R. S. COSGROVE and Another v. J. McKASY, Assignee. In the Supreme Court, Minnesota, July 8, 1896. [Reported in 65 Minnesota Reports, 426.] Petition in the District Court for Le Sueur County in the matter of the assignment of Edson R. Smith and Rollin E. Smith, partners as E. R. Smith & Co., insolvents. Collins, J. Edson R. and Rollin E. Smith had for some time prior to July 8, 1893, been copartners in business in Le Sueur County, in this State, under the firm name of E. R. Smith & Co., keeping and con- ducting a bank of deposit generally known as the "Bank of Le Sueur." They had previously executed and delivered a bond to the county, which bond had been duly approved, and said firm had been duly designated as a depositary of county funds, as provided by G. S. 1894, § 729 et seq. The Smiths were the principal obligors on this bond, which was a joint and several obligation ; and these petitioners, J. R. S. Cosgrove and J. A. Cosgrove, with three other persons, were sureties. On said day there was due from the firm to the county the sum of $4,180.09 on account of deposits theretofore made, and, being then 1 80 N. Ca. 26.3. 2 83 jr. Ca. 383. 8 A sure ty who has not paid has no legal set-off. Jones v. Wolcott, 15 Gray, 541. -^Ed! " 602 COSGKOVE V. McKASY. [CHAP. IIL insolvent, said copartners duly made an assignment, in accordance with the laws of this State, and for the benefit of all of their creditors, of all of their firm and individual property not exempt from seizure and sale under execution. Before said assignment, June 1, 1893, said J. R. S. and J. A. Cos- grove executed and delivered their promissory note, pajable to the order of said E. R. Smith & Co., for the sum of $5,500, payable De- cember 1, 1893, with interest, which note went into the hands of the assignee of said insolvents, as a part of the assets of their estate. September 8, 1893, the petitioners, as sureties upon the bond, paid to the county treasurer the sum of $2,090.05, and other sureties then and there paid the residue of the amount due to the county. They then petitioned the District Court to adjudge that the amount so paid by them on account of the bond be declared a valid set-off as against the note, and to direct the assignee to surrender up the note on being paid the balance found due thereon. Upon an answer made by the assignee, a trial was had, and the court found the facts as before stated. It also found that the note was given for money loaned by Smith & Co. to J. R. S. Cosgrove, that said J. A. Cosgrove signed the note as surety only, and that the rela- tion still existing between the makers of the note was that of principal and suret}'. As conclusions of law, the court adjudged that J. R. S. Cosgrove was entitled to have the sum of $1,045.03, paid by him to the county, applied upon the note as a payment, — the assignee being ordered to apply that sum, — and that J. A. Cosgrove was not en- titled to have any amount whatsoever applied. Both parties appealed, — the Cosgroves, from that part of the order which denied the right of set-off to J. A. Cosgrove, the suret}' upon the note as well as upon the bond, and the assignee, from that part which ordered the appli- cation of the amount paid by J. R. S. Cosgrove, principal upon the note and surety upon the bond. Both appeals were argued and sub- mitted together. The court below was clearly right in holding that the principal debtor upon the note was entitled to an offset, 1 but it was in error when it ordered the same to the amount of $1,045.03, which was one- fourth of the amount due to the county. There was merely an allega- tion in the petition that the Cosgroves had paid the sum of $2,090.05, or one-half of the amount due on the face of the bond when the as- signment was made, instead of two-fifths, the share they should have paid. The rule is that, where two or more sureties stand in the same 1 Set-off by surety against assignee of principal. — Merwin v. Austin, 58 Conn. 22 ; Barney v. Grover, 28 Vt. .391, Accord. Adams v. Rodarmel, 19 Ind. 339; "Walker v. McKay, 2 Met. (Ky.) 294; Ingalls v. Bennett, 6 Me. 79 ; Storts v. George, 150 Mo. 1 ; Nettles v. Huggins, 8 Rich. 273, Contra. In Kinsey v. Ring, 83 Wis. 536, the surety's right of set-off against the assignee of the principal was denied because, at the time of the assignment, the obligation of the surety had not matured. — Ed. SECT. IV.] baily's estate. 603 relation to a principal, they must bear the burdens of the position equally. There were five sureties, and if there was equality of pay- ment, as there should have been, each of the Cosgroves would have paid one-fifth of the debt, or $836.02. In no event would J. R. S. Cos- grove be entitled to offset more than the amount, prima facie, of his share of the sum due upon the bond, without some further allegation in his petition explanatory, and showing the necessity, of such pay- ment ; for instance, the insolvency of another surety. 1 We have stated that the court was right in holding that the peti- tioner last mentioned was entitled to an offset. The case of St. Paul & M. Trust Co. y. Leek 2 is authority upon this point. The later cases cited by counsel for the assignee — Northern Trust Co. v. Healy 8 and Northern Trust Co. v. Hiltgen 4 — have no bearing on the claim of offset made by J. R. S. Cosgrove. And the Court was also right when it held that J. A. Cosgrove was not entitled to offset any part of the amount paid by him as a surety upon the bond, as against the note, for the reason that it was not his note. He was not the principal debtor, but a surety only, and the doctrine of equitable set-off, invoked and relied on by him, cannot be extended so far as to allow a surety for a debt due to an assignee in insolvency to offset, as against it, the amount of an obligation which he has been obliged to pa}' as a surety for the assignor. The latter is, in every respect, a debt due to the surety from the estate ; but the former is not, strictly speaking, or for the purpose of invoking the equitable powers of the Court, a debt due from the surety. It is in fact the debt of his principal, J. R. S. Cosgrove. A surety cannot be al- lowed to have reimbursement for the loss he sustained as a surety 7 on the bond by offsetting the amount of his loss as against a debt actually due from J. R. S. Cosgrove. The order appealed from must be modified so as to reduce the amount, of offset allowed to $836.02. In all other respects it is af- firmed. BAILY'S ESTATE. JACKSON'S APPEAL. In the Supreme Court, October 2, 1893. [Reported in 156 Pennsylvania Reports, 634.] Mr. Justice McCollum. s Richard B. Baily and Francis Worth were co-sureties jointly and severally liable for the default of their prin- cipal, and in their relation to each other each was a principal for one- half the amount recoverable for such default, and a surety for one-half 1 As in Wayland v. Tucker, 4 Grat. 267. — Ed. 2 57 Minn. 87, 58 N. W. 826. 3 61 Minn. 230, 63 N. W. 625. 4 62 Minn. 361, 64 N. W. 909. 5 Only the opinion of the Court is given. — Ed. 604 baily's estate. [chap. hi. of it. If either was compelled to pay the whole amount, his rights and remedies against his co-surety for the half were the same as against their principal for the whole. Croft v. Moore ; x Mosier's Appeal ; 2 Hess's Estate ; 3 and Wright v. Grover & Baker S. M. Co., to use of Smith. If a surety gives a legacj' to his principal the latter cannot re- cover it from the estate of the former until he has satisfied or furnished indemnity against the demand for which the testator was his surety. Ross v. McKinney. 4 If the debt of the principal has been paid by the surety or his estate, such payment ma}' be relied on to satisfy or re- duce the amount of the legacy, and this is so, although the payment was made 03- the estate after proceedings for the recovery of the legacy were instituted. Beaver v. Beaver. 5 It is clear, therefore, that in a proceeding by Worth for the collection of the legacy to which he was entitled under and by virtue of the will of Richard B. Baily, the estate could deduct therefrom the amount it was compelled to pay by reason of his default as the testator's co-surety. It was thought, however, by the learned Court below, that as Baker purchased the legacy before the payment was made by the estate, such payment was not available as a partial defence to his claim for the whole of it, and in accordance with this view, it, less the collateral inheritance tax, was awarded to him. In support of this decree, it is urged that when Worth transferred the legacy the estate had no demand against him which was applicable to it, nor equity for the protection of which the executors could with- hold from him the whole or a part of it until indemnity was furnished or his liability as co-surety was discharged. We think this contention, to the extent that it denies the existence of such an equity in the estate at the time of the transfer, is unsound. It fails to give proper effect to the relation between co-sureties, and to duly consider the rights and liabilities which spring from it. Prima facie this relation is established between two persons when they unite with a third in an obligation for the payment of his debt, and b} r this act they become, as we have al- ready seen, his sureties for the whole debt, and sureties of each other for half of it. If their principal fails to pay his debt and the co-sureties pay it in equal proportions, he becomes their debtor and their liabilities to each other as such are discharged, but if one of them is compelled to pay the whole debt he is entitled to contribution from his co-surety, and may enforce it b} r an action of assumpsit, or by subrogation to the rights of the creditor. While the action for it cannot be maintained until default and payment as above stated, it is nevertheless true that the right to have and the liability to make contributions inhere in the transaction by which the sureties were jointly and severally bound for the debt of their principal. In Agnew v. Bell, 6 Kennedy, J., in deliv- ering the opinion of the Court, said : " It is certainly too well established 1 9 Watts, 451. 2 56 Pa. 76. 3 69 Pa. 272. • 4 2 Rawle, 227. 5 23 Pa. 167. 6 4 Watts, 31. SECT. IV.] baily's estate. 605 now to be questioned, that where an}' one or more of those who are co-sureties have had to pay, as such, the debt of their principal or any part thereof, and he is unable to reimburse it, the loss arising therefrom must be borne equally by all of them. Hence has arisen the right to contribution. This right has been considered as depending rather upoifa principle of equity than upon contract ; but it may well be con- sidered as resting alike on both for its foundation ; for, although gen- erally there is no express agreement entered into between joint sureties, yet from the uniform and almost universal understanding which seems to pervade the whole community that from the circumstance alone of their agreeing to be and becoming accordingly co-sureties of the prin- cipal, the}- mutually become bound to each other to divide and equalize any loss that may arise therefrom to either or any of them, it may with great propriety be said that there is at least an implied contract. Deering v. Winchelsea ; Craythorne v. Swinburne. This liability be- tween sureties to contribution in case of loss through the inability of their principal to pay, being known to them at the time of their becom- ing sureties, may well be considered a great if not the main induce- ment in many instances to their becoming such." It is therefore incorrect to say that the estate before payment of the principal's debt had no equity against the testator's co-surety and legatee which would enable it to withhold payment of the legacy until it was indemnified or the liability of such co-surety to pay one-half of that debt in case of the principal's inability to pay it was discharged. It clearly had such an equity, which in a suit by Worth for the legacy would have been, to the extent mentioned, available as a defence. This equity was not de- stroyed nor the defence founded upon it affected by the assignment of the legacy to Baker. He acquired by his purchase such right to the legacy as his assignor had, and this right, as we have seen, was quali- fied by the estate's equity against the latter as co-surety of the testator. The learned counsel for the appellee concedes in his printed argument that " if the decedent was surety for Worth, and that relation existed at the time of the transfer, the legacy would be abatable by the amount subsequently paid by the estate, or the legacy might be held to await the determination of the liability of the estate." It seems to us that this concession is fatal to the appellee's claim because, in the relation of co-sureties established between Baily and Worth, there was an im- plied promise by each to the other to pay one-half of their principal's debt in case of his inability to pay it, and as they were jointly and severally bound for such debt their relation to each other for half of it was that of principal and surety. Decree reversed and record remitted to the court below, with instruc- tions to enter a decree in accordance with this opinion. 1 1 Wayland v. Tucker, 4 Grat. 267, Accord. — Ed. [chap. III. ^ 1 isp: eis6j/, 657.] <3 -** -&*-&- L/606 ' LOOSEMORE V. RADFOKD. ^ LOOSEMORE v. RA£)FORD ^* W THE '^XME^TH^f^KILl^' XML^ \ Covenant. /Toe declaration stated, tb^r whereas the defendant, be- fore and at the time of the making of the indenture hereinafter men- tioned, was indebted to H. D. and G. B. in the sum of £400, secured to them by a promissory note made by the defendant, and by the plaintiff as the defendant's surety, and in £95 5s. 9d. for interest thereon ; and thereupon, by a certain indorsement [instrument?] bearing date, &c, made between the defendant of the one part, and the plaintiff of the other part, the defendant covenanted with the plaintiff, that he the defendant would well and truly pay to the said H. D. and G. B. the sum of £400, with interest as aforesaid, on the 13th day of August then next. Breach, that the defendant did not pay to the said H. D. and G. B., or either of them, the said sum of £400 and interest, or an}' part thereof, on the said 13th day of August, or at any other time. The defendant pleaded payment into court of Is. and no damages ultra, which latter averment was traversed by the replication. At the trial before Lord Abinger, C. B., at the Middlesex Sittings after Hilary Term, it appeared that the defendant being in embar- rassed circumstances, the payees had informed the plaintiff that they should hold him liable upon the note, wmereupon he obtained from the defendant the deed mentioned in the declaration. The note was still unpaid at the time of the trial : and it was objected that the plaintiff was therefore entitled to recover nominal damages only. The Lord Chief Baron overruled the objection, and under his direction the plain- tiff had a verdict ; damages, £500. Erie now moved for a new trial, on the ground of misdirection. The plaintiff, not having aetualby paid an} 7 money on the note, has suffered no substantial injury, and is entitled to nominal damages only. The money might have been paid by the defendant after the day of payment mentioned in the covenant. There is nothing to prevent the payees of the note from suing the defendant, in which case he will hava to pay the money twice over. Parke, B. I think there ought to be no rule. This is an absolute and positive covenant by the defendant to pay a sum of money on a day certain. The money was not paid on that day, nor has it been paid since. Under these circumstances, I think the jury were war- ranted in giving the plaintiff the full amount of the money due upon the covenant. If any money had been paid in respect of the note since the day fixed for the payment, that would relieve the plaintiff pro tanto from his responsibility. The defendant may perhaps have an equity that the money he may pay to the plaintiff shall be applied in discharge SECT. IV.] BEARDMORE V. ORUTTENDEN. 607 of his debt ; but at law the plaintiff is entitled to be placed in the same situation under this agreement, as if he had paid the money to the payees of the bill. Alderson, B. The question is, to what extent has the plaintiff been injured by the defendant's default? Certainly to the amount of the money that the defendant ought to have paid according to his covenant. The case resembles that of an action of trover for title- deeds, where the jury may give the full value of the estate to which they belong by way of damages, although they are generally reduced to 40s. on the deeds being given up. Gurney, B., and Rolfe, B., concurred. Rule refused. 1 BEARDMORE v. CRUTTENDEN. In Chancery, before Lord Thurlow, C, Hilary Term, 1791. [Reported in Cooke, Bankrupt Laws (8th edition), 232.] Bill by surety in a bond against the obligee, who is a mere trustee, and his cestui que trust, to compel them to prove under the commission against the obligor. Injunction for want of an answer, and upon mo- tion to dissolve it the defendants were ordered to prove upon plaintiff's bringing money into court. 2 1 Robinson v. Robinson, 24 Law Times, 112; Lathrop v. Atwood, 21 Conn. 117 (Waite, J., diss.) ; Gage v. Lewis, 68 111. 604 ; Devol v. Mcintosh, 23 Ind. 529; Lee v. Burrell, 51 Mich. 132 ; Furnas v. Durgin, 119 Mass. 500, 508 (semble) ; Locke v. Homer, 131 Mass. 93, 96 (semble) ; Ham v. Hill, 29 Mo. 275; Salmon Falls Bank v. Leyser, 116 Mo. 51 ; Sparkman v. Gove, 44 N. J. 252, 255-256 (semble) ; Poor v. Johnson, 17 Johns. 239, 479 (but see Powell v. Smith, 8 Johns. 249) ; Wilson v. Stilwell, 9 Oh. St. 467, Accord. S imilarly th e grantee of an estate who assumes to pay a debt ofthegrantor secured by a mortgage upon the proper ty convey ed is liable to the g rantor for the full amount of the debt, if he fails to pay the mortgagee when the debt matures. Let h bridge v. Mytton,2 B. k. Ad. VV2 ; Foster v. Stother, 42 Conn. 27T; MaloTt v. Goff, 96 Ind. 496 ; Baldwin v. Emery, 89 Me. 496 ; Furnas v. Durgin, 119 Mass. 500 ; Locke v. Homer, 131 Mass. 93 ; Reed v. Paul, 131 Mass. 129 ; Rice v. Sanders, 152 Mass. 108 ; Sparkman v. Gove, 44 N. J. 252. In Robinson v. Robinson, supra, Campbell, C. J., said : " It is true that the defend- ant incurs the periljjf having to pay twice ; but that arises from his own default in not performing his covenant." Erie, J., in the same case, said : " I would observe that in Loosemore v. Radford the point of hardship upon the defendant was fully before the Court ; be cause they throw out that the plaintiff would hold the money as trustee for t the defendant, who might, perhaps, have a remedy in equity against any misapproj >ria- V^ t ion of i t." There are similar suggestions of possible equitable relief for the principal in several of the cases cited in the first paragraph of this note and also in Carman v. Noble, 9 Barr, 366. The doctrine of the principal case is criticised in Sedgwick, Damages (8th ed.), §790. — Ed. 2 Wright v. Simpson, 6 Ves. 714, 733 (semble) ; Ex parte Rushforth, 10 Ves. 414 (semble); Ex parte Houston, 2 Gl. & J. 36, 42-43 (semble); Jackson v. Magee, 3 Q. B. 608 HAYES V. WARD. [CHAP. III. HAYES v. WARD and Others. In Chancery, New York, before James Kent, C, September 6, 1819, [Reported in 4 Johnson's Chancer y, 123.] The Chancellor. 1 It appears from the case that the defendant Beach is the principal debtor to the defendant Ward, on the note in question, and that the plaintiff, who indorsed it, stands in the character of surety. The plaintiff originally indorsed the note without consid- eration, for the benefit of the drawers, W. & H., and the defendant B. took it from the drawers, in consideration of lots agreed to be sold to one of the makers, or of a partnership, into which one of them was to be admitted. This consideration failed, for the lots were not sold, nor the partnership entered into. As between those original contracting parties, the note was without consideration, and could not have been enforced. When the note was passed by the defendant B. to the de- fendant W. the dealing was exclusively between these two defendants, and the plaintiff's name remained on the note, as indorser, without any consideration for his indorsement. We have no direct evidence that the fact of his being a naked guarantor, or surety, without interest, was known to the defendant W. , when he received this and the other notes from B., yet the facts are sufficient to justify such an inference. The note was not received by the defendant W. in the ordinary course of commercial business. It was taken upon the sale of bank shares ; and 48, 56 (semble) ; Wilds v. Attix, 4 Del. Ch. 253, 258 [semble) ; Wright v. Austin, 56 Barb. 13, 17 {semble), Accord. In Wright v. Simpson, supra, Lord Eldon said: •• As to the case of principal and surety, in general cases I never understood, that as between the obligee and the surety these was an obligation of active diligence against the principal. If the obligee begins to sue the principal, and afterwards give time, there the surety has the benefit of it. But the surety is a guarantee ; and it is his business to see, whether the principal pays, and not that of the creditor. The holder of the security, therefore, in general cases may lay hold of the surety ; and till very lately even in circumstances under which the surety would not have had the same benefit that the creditor would have had. But in late cases, provided there was no risk, delay, or expense, as in the case put, of the money in the next room, indemnifying against the consequences of risk, delay, and expense, the surety has a right to call upon the creditor to do the most he can for his benefit ; and the latter cases have gone farther. It is now clear, that if the surety deposits the money, and agrees that the creditor shall be at no expense, he may com- pel the creditor to prove under a commission of bankruptcy, and give the benefit of an assignment in that way. That case, therefore, perhaps does not bear much upon it. " So the case of a bankrupt acceptor and the holder and drawer of a bill would admit the same answer as the case of the bankrupt ; for the holder may be compelled to prove for the benefit of the drawer ; if not, the drawer sues upon a contract, th# terms of which flow out of the original contract, of the benefit of which he could na be deprived under those circumstances." — Ed. 1 Only the opinion of the Court is given. — Ed. SECT. IV.] HAYES V. WARD. 609 instead of relying upon the credit of the prior parties to the note, ac- companied with the indorsement of the defendant B., he took a bond and mortgage from B., as eventual security for the payment of the note. This and the other notes were sold by B. to the defendant W., almost immediately, after they were drawn, and the defendant W. admits that they were received by B. from one of the makers ; nor does he deny a knowledge of that fact, at the time he took the bond and mort- gage from B. The knowledge of that fact was sufficient notice to him, that the plaintiff was a voluntary indorser, for the accommodation of the makers ; and the defendant W. appears, from the pleadings and proofs, to be justly chargeable with knowledge, at the time he took the mort- gage, that the plaintiff was a gratuitous indorser. The plaintiff is then entitled, in equity, to all the privileges with which a surety is clothed, not onty as it respects the defendant B., but as it respects the defendant Ward, the present holder. I shall, therefore, in the further considera- tion of this case, assume the fact as clearly true, and well established, that between the plaintiff and the defendants, W. and B., the relation- ship existed of creditor on the one part, and principal debtor and surety on the other. This relationship was coeval with the bond and mort- gage, and the parties to this suit are entitled to all the rights, and bound b}' all the duties, resulting from that relation. The grave and difficult question then presents itself, whether the defendant W. ought to be required to resort, in the first instance, to the mortgage which he took from B., and which he says is a valid lien, and sufficient to satisfy the note? It is alleged that the mortgage security is destroyed by the usury, and that it would be unavailing in the hands of the plaintiff, if he were to pay the note, and have the bond and mortgage assigned to him (and which, as suret}', he would have a right to demand) by way of substitu- tion and indemnity. It is further alleged, that if the defendant W. has destroyed the validity of his own security taken from the principal debtor, he cannot have recourse to the plaintiff, because he has volun- tarily disabled himself from affording to the plaintiff, as surety, the requisite substitution. The right of substitution is a valuable right belonging to a suret} - , and the creditor must do nothing to impair it. There would be much equity in the plaintiff's case, if it should finally appear that the defendant W. had by his own act rendered the adequate security which he took from the principal debtor, illegal and void. The very taking of that security by him may have excited confidence in the surety, and lulled him to sleep, and deprived him of taking other and sound security, for his own eventual responsibilit}', until it was too late, and the rights of third persons had intervened. This considera- tion renders it an act of benevolence and equity, and imposes it as an obligation upon the creditor who takes security from the principal debtor, to take it fairly and lawfully, and to hold it impartially and justly. According to the doctrine of the civil law, the surety may, per 39 610 HAYES V. WAKD. [CHAP. III. exceptionem ccclendarum action inn, bar the creditor of so much of his demand as the surety might have received, by an assignment of his lien and right of action against the principal debtor ; provided, the creditor had, by his own unnecessary or improper act, deprived the surety of that resource. The surety, by his very character and relation of surety, has an interest that the mortgage taken from the principal debtor should be dealt with in good faith, and held in trust, not only for the creditor's security, but for the surety's indemnity. A mortgage so taken by the creditor is taken and held in trust, as well for the sec- ondary interest of the surety, as for the more direct and immediate benefit of the creditor, and the latter must do no wilful act, either to poison it, in the first instance, or to destroy or cancel it, afterwards. These are general principles founded in equity, and are contained in the doctrines laid down in Pothier's Treatise on Obligations, No. 496, 519, 520, to which reference has been made in the former decisions of this court. Cheesebrough v. Millard ; x Steevens v. Cooper. 2 This doctrine does not belong merely to the civil-law system. It is equally a settled principle in the English chancery, that a surety will be entitled to every remedy which the creditor has against the principal debtor, to enforce eveiy security, and to stand in the place of the cred- itor, and have his securities transferred to him, and to avail himself of those securities against the debtor. This right of the surety stands not upon contract, but upon the same principle of natural justice, upon which one suret} 7 is entitled to contribution from another. 2 Ves. 622 ; 1 Wightwick, 2-6 ; 1 Desaussure, 409; 2 Madd. Ch. Rep. 437 ; 14 Ves. 162; 10 Ves. 412; 11 Ves. 22. 8 But the application of these principles is not, necessarily, the question, at present. If the defendant W. should be required to prosecute pre- viously upon his mortgage, and he should be defeated in that remedy, by the invalidity of the mortgage, arising from his own illegal act, and should then recur back to the plaintiff, it would be in time to examine whether this case fell within the range of the doctrine to which I have referred. The only point now to be settled is, whether the defendant W. shall be stayed in his suit at law, until he has tried his remedy against the mortgaged premises. I am not aware that there is any general rule in Chancery, that the creditor must look to the principal debtor, and exhaust his remedy against him, before he can be permitted to resort to the surety. The general language in the books and the practice have been otherwise, and the surety has been considered (without any formal adjudication upon the point, and, perhaps, without any examination of it upon principle) as amenable, in ordinary cases, to the creditor, in the first instance, though the creditor may have taken ample security from the principal debtor. The creditor has usually called on the surety at his i 1 Johns. Ch. Rep. 414. a 1 Johns. Ch. Rep. 4.30, 431. 8 Vide Clason v. Morris, 10 Johns. Rep. 524, s. p. SECT. IV.] HAYES V. WARD. 611 election, and left him to resort to the principal debtor for his indemnity, after he has paid the debt, and after he has been clothed, by substitu-. tion, with all the rights and securities of the creditor. "The holder of the security, therefore, in general cases," says Lord Eldon, in Wright v. Simpson, 1 " may lay hold of the security : and till very lately, even in circumstances, under which the security would not have had the same benefit, that the creditor would have had." But in late cases, and under particular circumstances, Lord Eldon admits, that the surety has a right to call upon the creditor to do the most he can for his benefit. It is now considered as a settled rule (see the cases referred to in King v. Baldwin 2 ) that a surety may resort to chancery, if he appre- hends danger from the creditor's delay, and compel the creditor to sue the principal debtor, though, probably, he must indemnify the creditor against the consequences of risk, delay, and expense. This is what Lord Eldon supposes in the case already referred to. As early as the time of Lord Keeper North (1 Vera. 190), it was held, that equity would compel the principal debtor to pay the debt, after it had become due, at the instance of the suretj', and though the latter had not been sued, for it was " unreasonable that a man should always have such a cloud hanging over him." It seems, also, to be now considered (2 Fonb. 802, n. i ; 17 Ves. 517, 520) as the right of a surety to call upon a creditor having another fund, which the surety cannot make available, and to require him to resort to that fund in the first instance and exhaust it. And it is now settled, that the suret} r may require the creditor, upon a proper indemnity, to go and prove his bond under a commission of bankruptcy of the principal debtor, and the creditor will be a trustee for the dividends to the surety pa}ing the whole. Beadmore v. Crut- tenden. The case of Wright v. Nutt, 3 which underwent great dis- cussion, and which was much questioned, though not overruled, by Lord Eldon, in Wright v. Simpson, 4 may be cited for the principle, that there are cases in which a creditor ma}', in equity and good conscience, be compelled to resort to a particular fund, before he pursues the debtor personally. One circumstance that led Lord Thurlow, Lord Kenyon, and, afterwards, Lord Rosslyn to that decision, was that the creditor could not assign the benefit of the fund to the debtor. It is easy to per- ceive that such a principle applies with much greater force to the case of a surety, and to a fund or pledge, created at the time of the original transaction between the parties. But all the instances to which I have alluded rmiy be considered as cases of a special nature ; they do not appear to establish any such general rule as that derived from the civil law, requiring the principal debtor to be first sued, which rule prevails in all those countries where the civil law is an essential part of the municipal law of the land. According to the Roman law, in use before the time of Justinian, the 1 6 Ves. 734. 2 2 Johns. Ch. Rep. 562, and 3 Merivale, 579. 8 1 H. Black. 136, 3 Bro. 326. * 6 Ves. 714. €12 HAYES V. WARD. [CHAP. III. creditor, as with us, could apply to the surety, before applying to the principal. Jure nostro est potestas creditori, relicto reo, eligendi fidejussores (Code, 8, 41, 5); and the same law was declared in an- other imperial ordinance (Code, 8, 41, 19). But Justinian, in one of his novels (Nov. 4, c. 1, entitled, Ut Creditores primo loco con- veniant principalem), allowed to sureties the exception of discussion, or beneficium ordinis, b} T which they could require, that before they were sued, the principal debtor should, at their expense, be prose- cuted to judgment and execution. It is a dilatory exception, and puts off the action of the creditor against the surety, until the remedy against the principal debtor has been sufficiently exhausted. This provision in the novels has not been followed in the States and cities of Germany, except in Pomerania (Heinec. Elem. Jur. Germ, lib. 2, tit. 16, s. 449, 450, 451, 465) ; but it has been adopted in those other countries in Europe, as France, Holland, Scotland, &c, which follow the rules of the civil law (Pothier's Trait, des Ob. No. 407-414; Code Napoleon, No. 2021, 2, 3; Voet, Com. ad Pand. tit. De Fide- jussoribus, 46, 1, 14-20 ; Hub. Prselec. lib. 3, tit. 21, s. 6 ; Ersk. Inst. 504, s. 61). A rule of such general adoption shows that there is nothing in it inconsistent with the relative rights and duties of prin- cipal and suret}', and that it accords with a common sense of justice, and the natural equity of mankind. Without meaning, however, to lay down any such general rule (and for which I have not seen any sufficient authority in the equity juris- prudence of England), I think there are peculiar circumstances, in this case, to call for a continuation of the injunction upon the suit at law, until the defendant W. has pursued his remedy upon the mortgage. The defendant W. has shown a distrust of the validity of the mortgage by his demurrer, and by omitting to prosecute either the plaintiff, or the defendant B., in New Jerse}', where the} - all reside, and where no impediment to a suit appears to exist, and by prosecuting the plaintiff, while on a temporaiy visit to New York. The defendant W. ought to be obliged, under such a just suspicion of his case, to try the validity of his mortgage, at home, and not to compel the plaintiff to pay, and then turn over to him a pledge, which, if frail and insecure, has been rendered so by his own illegal act. I put this case entirely upon the ground of the allegation, to which no answer has been given, that the mortgage is infected with usury, and would be useless and void, if placed, by substitution, in the hands of the surety. If this should hap- pen to be the case, the plaintiff, on paying, might be deprived of all indemnity from his principal, by reason of the conduct of the creditor. Nor does it appear to be necessar}-, that the suit at law should pro- ceed to judgment, for there is no allegation of any apprehension of the plaintiffs insolvency, and the mortgage, if good, is admitted to be an ample security. I shall, accordingly, continue the injunction, until further order, to the end that the defendant W. ma}' make a fair experiment with his SECT. IV.] HOPPES V. HOPPES. 613 remedy upon the mortgage, before he applies for leave to proceed in his suit at law ; and the question of costs, and all other questions arising upon this case, are reserved until such further application. 1 HOPPES and Another v. HOPPES and Another. In the Supreme Court, Indiana, November Term, 1889. [Reported in 123 Indiana Reports, 397.] Olds, J. 2 It is next objected that the complaint does not show that the appellees had any defence to the original action. This objection, we think, is not tenable. As appears from the allegations of the complaint, Daniel Hoppes was the principal debtor, and his wife, Mariah, was his surety ; they both mortgaged real estate for the payment of the debt, and it is a well settled principle that when the principal and surety both mortgage property for the payment of a debt of the principal, the surety is en- titled to have the property of the principal first sold to satisfy the debt (Brandt, Sure, and Guar., section 204), and a purchaser of the property 1 Right of surety to compel creditor to apply collateral security before resorting to surety. — This right has been asserted extrajudicially in several instances, and has been made the basis of decision in a few cases. Re Babcock, 3 Story, 393 (semble) ; Wilds v. Attix, 4 Del. Ch. 253, 258 (semble) ; Irick v. Black, 17 N. J. Eq. 189 (statutory) ; Phila. Co. v. Little, 41 N. J. Eq. 519 (statutory); Wright v. Austin, 56 Hun, 13; Sheppard v. Conley, 9 N. Y. Sup. 777; Polk v. Gallant, 2 Dev. & B. Eq. 395; Egerton v. Alley, 6 Ired. Eq. 188 (semble) ; Hatcher v. Hatcher, 1 Rand. 53. For authority, contra, see Davis v. Patrick, 57 Fed. R. 909 ; Thorn v. Pinkham, 84 Me. 101, 104; Allen v. Woodard, 125 Mass. 400; Lee v. Griffin, 31 Miss. 632, 638 (semble. By statute in Mississippi, if execution issue against principal and surety, and principal has property subject to execution, the sheriff, if aware of that fact, must levy first upon the property of the principal) ; Aultman Co. v. Smith, 52 Mo. Ap. 351*; First Bank v. Wood, 71 N. Y. 405; Third Bank v. Shields, 55 Hun, 274 ; Sterne v. Talbot, 89 Hun, 368 ; Heebner v. Townsend, 8 Abb. Pr. 234 ; Gary v. Cannon, 3 Ind. Eq. 64 (semble) ; Bingham v. Mears, 4 N. Dak. 437 (semble). A fortiori a surety is not entitled to have collateral security in the hands of the creditor sold before maturity of the suretyship obligation, even though the property is in danger of destruction or depreciation. Campbell v. Macomb, 4 Johns. Ch. 534. Right of surety to compel creditor to sue principal. — There are dicta in favor of this right also. Re Babcock, 3 Story, 393 (semble) ; Bingham v. Mears, 4 N. Dak. 437 (semble, if indemnity is given); Rice v. Downing, 12 B. Mon. 44, 45 (semble); Sasscer v. Young, 6 Gill & J. 243, 248 (semble) ; Whitridge v. Durkee, 2 Md. Ch. 442 (semble) ; Bellows v. Lovell, 5 Pick. 307, 310 [semble, if indemnity is given) ; Dillon v. Russell, 5 Neb. 484, 489 (semble) ; King v. Baldwin, 17 Johns. 384, 390, 2 Johns. Ch. 554, 561 (semble); Hogabrom v. Herrick, 4 Yt. 131, 134 (semble); Harris v. Newell, 42 Wis. 687, 691 (semble). But see contra, Woffington v. Sparks, 2 Yes. 569 ; Hall v. Hall, 34 Ind. 314 ; First Bank v. Wood, 71 N. Y. 405, 411 ; Mead v. Grigsby, 26 Grat. 612; Penn v. Ingles, 82 Va. 65. — Ed. 2 Only a portion of the opinion of the Court is given. — Ed. 614 HOPPES V. HOPPES. [CHAP. III. of the suret}' so mortgaged would have this same right ; so, one taking title to such property of the surety by inheritance would have this right. It has been repeatedly held by this court that a wife joining in a mort- gage with her husband to secure his debt has the right to have his two- thirds interest in the land first sold to pay the debt. Birke v. Abbott ; 1 Figart v. Halderman ; 2 Medsker v. Parker; 3 Leary v. Shaffer ; 4 Grave v. Bunch ; 5 Main v. Ginthert ; 6 Trentinan v. Eldridge. 7 The children of Mariah Hoppes, deceased, had the right, under the facts alleged in the complaint, to have the husband's lands first sold to satisfy the mortgage debt. 8 Judgment affirmed, with costs. 1 103 Intl. 1. 2 75 Ind. 564. 3 70 Ind. 509. 4 79 Ind. 567. 5 83 Ind. 4. 6 92 I n d. 180. 7 98 Ind. 525. 8 Medsker v. Parker, 70 Ind. 509 ; Moffitt v. Roche, 77 Ind. 48 ; Carley v. Fox, 38 Mich. 387 ; Wilcox v. Todd, 64 Mo. 388 ; Knight v. Whitehead, 26 Miss. 245 (semble) ; Erie Bank v. Roop, 80 N. Y. 591, 597 (semble) ; Vartie v. Underwood, 18 Barb. 561, 565 (semble); Gore v. Townsend, 105 N. Ca. 228; Shew v. Call, 119 N. Ca. 450, Accord. See also Aguilar v. Aguilar, 5 Mad. 414. Principal cannot buy at sale on execution by creditor against surety. — It is a conse- quence of the principal's duty to exonerate the surety that he cannot have the benefit of a purchase at a sale under execution by the creditor against the surety. Equity will treat the principal as a constructive trustee for the surety as to the property pur- chased and consider the purchase money as a payment of the debt due from the prin- cipal to the creditor. Madgett v. Fleenor, 90 Ind. 517 ; Greer v. Wintersmith, 85 Ky. 516; Van Home v. Everson, 13 Barb. 526 ; Perry v. Yarbrough, 3 Jones, Eq. 66. Surety may buy at sale on execution by creditor against principal. — It has been de- cided in a few cases that a surety, in spite of his intervention as a friend of the prin- cipal, may purchase, nevertheless, and keep what he buys at a sale under execution by the creditor against the principal. Carlos v. Ansley, 8 Ala. 900 ; Horsefield v. Cost, Addis. (Pa.) 152. Sm-ety's right to realize an indemnity security before paying the creditor. — If security is given to a surety purely as an indemnity it seems clear that he has no right to resort to it until he has paid the creditor. Darst v. Bates, 51 111. 439 ; Planters' Bank v. Douglass, 2 Head, 699. But see contra, De Cottes v. Jeffers, 7 Fla. 284 ; Montgomery v. Luce, 2 La. An. 469 ; Tankersley v. Anderson, 4 Dess. 44 ; McKnight v. Bradley, 10 Rich. Eq. 557 ; Hellams v. Abercrombie, 15 S. Ca. 110; and compare Markell v. Eichelberger, 12 Md. 78 ; Kramer v. Trustees, 15 Oh. 254. But if the principal gives his own note, bond, or other obligation to the surety as an indemnity against the hitter's liability to the creditor, there is no good reason why the surety may not collect the full amount of such note, bond, or other obligation as soon as it matures, although he had not discharged his liability as surety. Russell v. La Roque, 11 Ala. 352; Moseley v. Ames, 5 All. 163; Hapgood v. Wellington, 136 Mass. 217 (but see Little v. Little, 13 Pick. 426) ; Thurston v. Prentiss, 1 Mich. 193 ; Jones v. Child, 8 Nev. 121 ; Churchill v. Hunt, 3 Den. 321 ; Belloni v. Freeborn, 63 X. Y. 383 ; Merchants' Bank v. Cummings, 149 N. Y. 360 ; Wright v. Whiting, 40 Barb. 235 ; Jarvis v. Sewall, 40 Barb. 449. But see contra, Hazeltine v. Guild, 11 N. II. 211 ; Osgood v. Osgood, 39 N. H. 209 ; Child v. Powder Works, 44 N. H. 354 ; Woodbridge v. Scott, 3 Brev. 193. — Ed. SECT. IV.] BKACKETT V. RICH. 615 GEORGE A. BRACKETT v. J. D. RICH. In the Supreme Court, Minnesota, April G, 1877. [Reported in 23 Minnesota Reports, 485.] Appeal by plaintiff from a judgment of the municipal court of the cit}' of Minneapolis. The action was on a promissory note, made by one Gibson to defendant's order, and, for value received, transferred before maturity to plaintiff by defendant, who wrote and signed upon the back thereof the following : " I guarantee the collection of the within note." The action was tried by the court without a jury, and it was found that the note had not been paid ; that plaintiff had de- manded payment of the note at maturity, from the maker, and there- after from defendant, but had never taken legal proceedings to collect from the maker. It was also found that for some two years after the maturity of the note the maker resided in Hennepin County, during all which period he was insolvent, and that he then left the State. Among other conclusions of law the court found that the maker's insolvency was no excuse for plaintiff's failure to proceed against him, and that, because of such failure, the plaintiff could not recover against defend- ant as guarantor. 1 Berry, J. With regard to the proper construction of a contract of this kind the authorities disagree. By some it is held that such a guaranty is an undertaking that the note is collectible by due course of law, and that the guarantor undertakes to pay only when it is ascer- tained that it cannot be collected by suit prosecuted to judgment and execution against the maker ; and that the endeavor to collect of the maker, by this due course of law, is a condition precedent to the right of action against the guarantor. 2 This is the view taken in New York. Moakley v. Riggs ; 3 Cumpston v. McNair ; 4 Craig v. Parkis. 5 Also, in Wisconsin. Dyer v. Gibson ; 6 French v. Marsh. 7 By other authorities it is held that a guaranty of collection is an 1 The statement is abridged and a portion of the opinion is omitted. —Ed. 2 Thomas v. Dodge, 8 Mich. 51 ; Barman r. Carhartt, 10 Mich. 338; Johnson v. Shepard, 35 Mich. 115; Bosman v. Akeley, 39 Mich. 710; Schermerhorn v. Conner, 41 Mich. 374; Briggs v. Norris, 67 Mich. 325; Clark v. Kellogg, 96 Mich. 171; Cumpston v. McNair, 1 Wend. 457 ; White v. Case, 13 Wend. 543 ; Loveland v. Shep- ard, 2 Hill, 139; Mosher v. Hotchkiss, 2 Keyes, 589 ; Craig v. Barkis, 40 N. Y. 181 ; Northern Co. v. Wright, 76 N. Y. 445; Meed v. Parker, 111 N. Y. 259 (compare Ralph v. Eldridge, 137 N. Y. 525) ; Burt v. Horner, 5 Barb. 501 ; Mains v. Haight, 14 Barb. 76; Newell v. Fowler, 23 Barb. 628 ; Gallagher v. White, 31 Barb. 92 (but see Cady v. Sheldon, 38 Barb. 103, semble, contra); Mosier v. Waful, 56 Barb. 80; Ralph v. Eldredge, 58 Hun, 203 ; Reines v. Berkman, 27 N. Y. Misc. R. 793 ; Day v. Elmore, 4 Wis. 190; Borden v. Gilbert, 13 Wis. 670; Dyer v. Gibson, 16 Wis. 557; French v. Marsh, 29 Wis. 649; Cottrell v. New London Co., 94 Wis. 176; Getty v. Bchanz, 101 Wis. 229. —Ed. 3 19 John. 69. 4 1 Wend. 457. 5 40 N. Y. 181. 6 16 Wis. 557. 7 29 Wis. 649. 616 BRACKETT V. RICH. [CHAP. III. undertaking by the guarantor to pa}-, if payment cannot, by due and reasonable diligence, be obtained of the maker ; or, as it is sometimes expressed, that the note is " capable of being collected." This is the view taken in Vermont. Wheeler v. Lewis; 1 Sylvester v. Downer; 8 Bull v. Bliss; 3 Dana v. Conant. 4 In Connecticut. Perkins v. Catlin ; 6 Ranson v. Sherwood. 6 In Maine. Gillighan v. Boardman. 7 In Pennsylvania. McDoal v. Yeomans ; 8 McClurg v. Fryer. 9 In Massa- chusetts. Marsh v. Day; 10 Sanford v. Allen. 11 In the Supreme Court of the United States. Camden v. Doreinus. 12 See also 2 Parsons' Notes & Bills, 140-143 ; and notes and dissenting opinion of Mason, J., in Craik v. Parkis, supra. This latter construction appears to us not only to be supported by the greater weight of authority, but to be the more natural and true construction. As said by Gibson, C. J., in McDoal v. Yeomans : "To warrant that a debt is collectible is to warrant that it is legally de- mandable, and that the debtor is of competent ability to answer it — not that he will pay it when demanded by execution." In the application of the construction which we adopt, it is held — and, in our opinion, correctly held — by many of the authorities last above cited, that if the maker of the note is insolvent at its maturity, and continues to be so, the holder is not obliged to institute legal pro- ceedings against him before resorting to the guarantor. As remarked by Daniel, J., in Camden v. Doremus (p. 533) : " The condition to which the plaintiff (a guarantor) was pledged was the practice of due — that is, proper, just, reasonable — diligence ; not to the performance of acts which were obviously useless, and from which expense and injury might arise, but from which advantage certainly could not. The diligent and honest prosecution of a suit to judgment, with a return of nulla bona, has always been regarded as one of the extreme tests of due diligence. This phrase, and the obligation it imports, may be satisfied, however, by other means. The ascertainment, upon correct and sufficient proofs, of entire or notorious insolvency, is recognized by the law as answering the demand of due diligence, and as dispensing, under such circumstances, with the more dilatory evidence of a suit." So, in Bull v. Bliss, the jury having found that the maker of the note was " wholly and utterly insolvent." "This, at least prima facie" say the court (p. 131), "is a sufficient excuse for an omission to attempt to collect the note of the maker. The law does not require the performance of an idle act." So it was held to be a sufficient ex- cuse for a like omission, in Dana v. Conant (p. 253), that the makers of the note guaranteed had " failed, and become insolvent, and desti- tute of any attachable property, and have so remained ever since." So, in Sanford v. Allen, the instruction upheld was that, if the maker MlVt. 265. 2 18 Vt. 32. 3 30 Vt. 127. 4 30 Vt. 246. 5 11 Conn. 213. 9 26 Conn. 437. 7 29 Me. 79. 8 8 Watts, 361. 9 15 Pa. St. 293. » 18 Pick. 321. X1 1 Cush. 473. 12 3 How. 515. SECT. IV.] BKACKETT V. RICH. 617 of the note was " insolvent, and wholly unable to pay the note at the date of the guaranty, and had continued to be so, that if he had no property out of which an execution could have been satisfied, either wholly or in part, and that a judgment and execution against him would have been of no avail, the plaintiff (the holder) might recover, without proving the existence of such judgment and execution." In McDoal v. Yeomans the exception, in considering which the court held that insolvency of the maker of a guaranteed note excused the omis- sion of the holder to proceed against him at law, was an exception to an offer to prove that the maker " was so utterly insolvent that an action would have been fruitless ; " and, in McClurg v. Fryer, the court say : " The law requires no man, in the pursuit of his rights, to do a vain and futile thing, useful to nobody, and hurtful to himself by the needless expense and trouble it would impose. The court was, therefore, right in instructing the jury, that if, at the time of the matu- rity of the guaranty, Mrs. McKinley (the principal debtor) was so utterly insolvent as not to make it worth while to sue her, a suit against her was unnecessaiy ; that would be unnecessary cost and trouble on a man for nothing. Insolvency, hopeless or utter insol- vency, may be proved, like everything else depending on facts, by parol as well as by record, and we cannot hold that it is necessary to sue a beggar." It is to be observed that the insolvency which is thus required to excuse want of legal proceedings is something more than the insolvency of a person " who is not able to pay all his debts from his own means, or whose propert}' is not in such a situation that all his debts ma}' be collected out of it by legal process " (Lamberton v. Windotn x ) ; but, as it is expressed in one of the cases cited, such an " utter insolvency that an action would have been fruitless." This is, we think, the cor- rect rule. 2 1 18 Minn. 506, 515. 2 Camden v. Doremus, 3 How. 515 (semble) ; Perkins v. Catlin, 11 Conn. 213; Allen v. Rundle, 50 Conn. 9 ; Lemmon v. Strong, 55 Conn. 443 ; Pittman v. Chisholm, 43 Ga. 442 ; Dillman v. Nadelhofer, 160 111. 121 ; Peck v. Frink, 10 Iowa, 193 ; Durand v. Bowen, 73 Iowa, 57.3 ; Huntress v. Patten, 20 Me. 28 ; Lewis v. Hoblitzell, 6 Gill & J. 259; Sanford v. Allen, 1 Cush. 473; Jones v. Ashford, 79 N. Ca. 172; Stone v. Rockefeller, 29 Oh. St. 625 ; McDoal p. Yeomans, 8 Watts, 361 ; McClurg v. Foyer, 15 Pa. 293 ; Janes v. Scott, 59 Pa. 178 ; Nat. Ass'n v. Lichtenwalner, 100 Pa. 100 ; Jones v. Greenlaw, 6 Cold. 342 ; Cates v. Kittrell, 7 Heisk. 606 ; Texas Co. v. Griswold (Texas Civil Appeals, 1900), 41 S. W. P. 513; Wheeler v. Lewis, 11 Vt. 265 ; Bull v. Bliss, -30 Vt. 127 ; Dana v. Conant, 30 Vt. 246, Accord. Uncouectibility of the obligation a condition precedent. — To maintain an action against a guarantor of collectibility, the creditor must allege in his declaration the facts show- ing the obligation to be uncollectible, or an excuse for the non-performance of the condition precedent. Peck v. Frink, 10 Iowa, 193 ; Bosnian v. Akeley, 39 Mich. 710; Moakley v. Riggs, 19 Johns. 69 ; Manis v. Haight, 14 Barb. 76 ; Stone v. Rockefeller, 29 Oh. St. 625 ; Gilbert v. Henck, 30 Pa. 205 ; Janes v. Scott, 59 Pa. 178, 182 ; Fvans v. Bell, 45 Tex. 553 ; Texas Co. v. Griswold (Texas Civil Appeals, 1900), 41 S. W. R 513. Uncollectibility cannot be shown, if any one of several prior parties can pay. — Summer* 618 BRACKET! V. RICH. [CHAP. IIL It remains to consider the point that the plaintiff is not entitled to recover because k ' he neither alleges nor proves any notice to defend- ant, either of* a demand of, or refusal by, the maker of payment, or v. Barrett, 65 Iowa, 292; Moakley v. Riggs, 19 Johns. 69; Lovelaud v. Shepard, 2 Hill, 139; Cady v. Sheldon, 38 Barb. 103. See also Lewis v. Hoblitzell, 6 Gill & J. 259, 264. Or if any collateral security is not exhausted. Barman v. Carhartt, 10 Mich. 338; Johnson v. Shepard, 35 Mich. 115; Newell v. Fowler, 23 Barb. 628; Bor- den v. Gilbert, 13 Wis. 670; Cottrell v. New London Co., 94 Wis. 176 (but see Day v. Elmore, 4 Wis. 190). But if the principal is an insolvent corporation the creditor is not required to ex- haust the statutory liability of the shareholders before proceediug against the guar- antor. Nat. Association v. Lichtenwaluer, 100 Pa. 100. Due diligence in instituting and conducting legal proceedings. — The creditor's delay in beginning or his negligence in conducting legal proceedings was fatal in the fol- lowing cases: Getty v. Schantz, 100 Fed. R. 577 (14 months) ; Voorhis v. Atlee, 29 Iowa, 49 (10 months) ; Durand v. Bowen, 73 Iowa, 573 (beyond first regular terra of court) ; Gillighan v. Boardman, 29 Me. 79 (semble) ; Moakley v. Riggs, 19 Johns. 69 (17 months); Craig v. Barkis, 40 N. Y. 181 (6 months); McMurray v. Noyes, 72 N. Y. 523 (14 months) ; Northern Co. v. Wright, 76 N. Y. 445 (9 months); Burt v. Horner, 5 Barb. 501 (17 months) ; Manis v. Haight, 14 Barb. 76 ; Tiffany v. Willis, 30 Hun, 266 (5£ years) ; Beeker v. Saunders, 6 Ired. 380 (15 months) ; Gilbert v. Henck, 30 Fa. 205 (inadequate execution) ; Hoffman v. Bechtel, 52 Pa. 190 (failure to dis- cover property subject to levy) ; Dutton v. Pyle (Pennsylvania, 1900), 45 Atl. R. 429 (3 years) ; Cates v. Kittrell, 7 Heisk. 606 (3 years) ; Shepard v. Phears, 35 Tex. 763 (4j years) ; Wheeler v. Lewis, 11 Vt. 265 (undue delay in carrying on an action begun seasonably) ; French v. Marsh, 29 Wis. 649 ; Getty v. Schantz, 101 Wis. 229. Due diligence was exercised in the following cases : Thomas v. Woods, 4 Cow. 173 ; Kinyon v. Brock, 72 N. Ca. 554 ; Forest v. Steward, 14 Oh. St. 246 ; Nat. Association v, Lichtenwaluer, 100 Pa. 100; Tissue v. Hanna, 158 Pa. 384 (4 months) (delay through- out war of rebellion) ; Foster v. Barney, 3 Vt. 60 {6 days). Removed of principal from the State. — If the principal or other prior party removes from his State, the creditor need not institute legal proceedings against him in the State of his new residence. White v. Case, 13 Wend. 543 ; Burt v. Horner, 5 Barb. 501 ; Cooke v. Nathan, 16 Barb. 342 ; Mosier v. Waful, 56 Barb. 80; Towns v. Farrar, 2 Hawks, 163 ; Joues v. Ashford, 79 N. Ca. 172; Benton v. Gibson, 1 Hill (S. Ca.), 56 ; Jones v. Greenlaw, 6 Cold. 342. But he should take proceedings hy publication in the State of his former residence. White v. Case, 13 Wend. 543 ; Mosier v. Waful, 56 Barb. 80. Waiver by promise of guarantor after default of creditor. — Any failure to exercise the usual diligence which was induced by the couduct of the guarantor will not prejudice the creditor. But if, without any encouragement by the guarantor, the creditor has failed to perform the coudition precedent to the guarantor's liability, a subsequent promise by the guarantor to pay nevertheless will not help the creditor. Van Derveer v. Wright, 6 Barb. 547. But see contra, Ashford v. Robinson, 8 Ired. 114, and compare Tinkum v. Duncan, 1 Grant (Pa.), 228. Absence of damage to guarantor. — For the same reason a creditor who has not per- formed the condition precedent cannot help his case by showing that its non-perform- ance did not cause any damage to the guarantor. Craig v. Parkis, 40 N. Y. 181 ; Burt v. Horner, 5 Barb. 501 ; French v. Marsh, 29 Wis. 649. But see contra, Gillighan v. Boardman, 29 Me. 79 ; Cates v. Kittrell, 7 Heisk. 606. What amounts to a guarantee of collectibility.— A guarantee of collection is equiva- lent to a guarantee of collectibility. And such a guarantee may be created by any words of similar import, as iu the following cases : Phenix Co. v. Louisville Co., 8 Fed. R. 142 (" if creditor will endeavor to collect ") ; Cowles v. Peck, 55 Conn. 251 ("good until paid") ; Pittman v. Chisholm, 43 Ga. 442 ("to be liable only in second instance"); Ely v. Bibb, 4 J.J. Marsh. 71 ("guarantee ultimate payment"); Hun- SECT. IV.] BRACKETT V. RICH. 619 that collection could not be enforced against him." The only notice which it is the duty of the holder to give to the guarantor is notice of his inability to collect the note of the maker; and failure to give this notice furnishes no defence to the guarantor, unless he has been preju- diced thereby. 1 2 Parsons' Notes & Bills, 142 ; Gillighan v. Board- man ; 2 Bashford v. Shaw. 3 Judgment reversed, and new trial directed. tress v. Patten, 20 Me. 28 (" guaranty of final payment ") ; Lewis v. Hoblitzell, 6 Gill & J. 259 ("answerable for final payment"); Curtis v. Smallman, 14 Wend. 231 ("I warrant this note good ") ; Cooke v. Nathan, 16 Barb. 342 (" I agree that this note is good ") ; McMurray v. Noyes, 72 N. Y. 522 (" to pay any deficiency on foreclosure") ; Kinyon v. Brock, 72 N. Ca. 554 (" to be good and solvent ") ; Jones v. Ashford, 79 N. Ca. 172 (" in case he fails to recover, to pay principal and costs ") ; Johnston v. Mills, 25 Tex'. 704 (" ultimately responsible ") ; Evans v. Bell, 45 Tex. 553 (" if bearer fails to collect, to be responsible"); Hammond v. Chamberlin, 26 Vt. 406 ("good until January 1, 1850"). Compare the following cases in which the words were interpreted as amounting to a guaranty of payment. Taylor v. Soper, 53 Mich. 96 (" note is as good as gold ") ; Kock v. Malhorn, 25 Pa. 89 (" just as good as if I would give you the money — I will insure it as good as gold and silver "). By a doctrine, peculiar to Pennsylvania, many undertakings, which would else- where be regarded as guarantees of payment are treated in that State as guarantees of collectibility. Supra, 239, n. ; Mcintosh v. Reed, 89 Fed. R. 464. In Connecticut, an aval or anomalous indorser is a guarantor of collectibility. Per- kins v. Catlin, 11 Conn. 213, and other cases cited in 1 Ames, Cases on Bills & Notes, 271. — Ed. 1 Gillighan v. Bowman, 29 Me. 79 ; Thomas v. Woods, 4 Cow. 173 ; Bashford v. Shaw, 4 Oh. St. 263 ; Gibbs v. Cannon, 9 S. & R. 198; Brown v. Brooks, 25 Pa. 210; Janes v. Scott, 59 Pa. 178 ; Benton v. Gibson, 1 Hill (S. Ca.), 56 ; Sylvester v. Downey, 18 Vt. 32, Accord. — Ed. 2 29 Me. 79. 3 4 Oh. St. 263. 620 MAURE V. HARRISON. [CHAP. IV. CHAPTER IV. CREDITOR'S RIGHTS TO SURETY'S SECURITIES. MAURE v. HARRISON. In Chancery, before Sir James Astry and Dr. Edisbury, Lords Commissioners, Michaelmas Term, 1692. [Reported in 1 Equity Cases, Abridgment, 93, placitum 5] A bond creditor shall, in this court, have the benefit of all counter bonds or collateral security given by the principal to the surety ; as if A owes B money, and he and C are bound for it, and A gives C a mortgage or bond to indemnify him, B shall have the benefit of it to recover his debt. 1 i Chamberlain v. St. Paul Co., 92 U. S. 299, 306. (semble) ; Burroughs v. U. S., 2 Paine, C. C. 569 ; Ex parte White, 2 Low. 343 ; Mathews v. Abbott, 2 Hask. 289 ; Tompkius v. Catawba Mills, 82 Fed. R. 780 ; Toulmin v. Hamilton, 7 Ala. 362 ; Troy v. Smith, 33 Ala. 469 ; Saffold v. Wade, 51 Ala. 214 ; Forrest v. Luddington, 68 Ala. 1 (semble) ; Daniel v. Hunt, 77 Ala. 567 (semble) ; Van Orden ». Durham, 35 Cal. 136; Lewis v. De Forest, 20 Conn. 427 ; Constant v. Matteson, 22 111. 546 (semble) ; Durham 17. Craig, 79 Ind. 117 ; Plant v. Storey, 131 Ind. 46; Rankin v. Wilsey, 17 Iowa, 463 ; Seibert v. Rowe, 8 Kan. 52 ; Bronston v. Robinson, 4 B. Mon. 142 ; Moore v. Moberly, 7 B. Mon. 299 (semble) ; Tilford v. James, 7 B. Mon. 336 (semble) ; Taylor v. Farmers' Bank, 87 Ky. 398, 402 (semble) ; King v. Harman, 6 La. 607 (but see Bowman v. McElroy, 15 La. An. 646 ; Spiller v. Creditors, 16 La. An. 292) ; In re Fickett, 72 Me. 266 ; Stew- art v. Welch, 84 Me. 308 ; Kunkel v. Fitzhugh, 22 Md. 67 ; Owens v. Miller, 29 Md. 144; Boyd v. Parker, 4.3 Md. 182; Baltimore Co. v. Trimble, 51 Md. 115 ; Eastman v. Foster, 8 Met. 19 ; Rice v. Dewey, 13 Gray, 47 ; New Bedford Inst. v. Fairhaven Bank, 9 All. 175; Kelly v. Herrick, 131 Mass. 373; Franklin Bank v. Greenfield Bank, 138 Mass. 515 (explaining Meed v. Nelson, 9 Gray, 55 ; Provident Inst. v. Stetson, 12 Gray, 27) ; Butler v. Ladue, 12 Mich. 173; Union Bank v. Rich, 106 Mich. 319; Haven v. Foley, 18 Mo. 136 (semble); St. Louis Co. v. Clark, 36 Mo. 601 (semble); Logan v. Mitchell, 67 Mo. 524 (semble) ; Thornton v. Nat. Bank, 71 Mo. 221 (semble); Tolle v. Boeckler, 12 Mo. Ap. 54 ; Richards v. Yoder, 10 Neb. 429 ; South Omaha Bank v. Wright, 45 Neb. 23 ; Longfellow v. Barnard (Nebraska, 1899), 79 N. W. R. 255 ; Bank v. Her- rick, 62 N. H. 174 ; Holt v. Savings Bank, 62 N. H. 551 ; Barton v. Croydon, 63 N. H. 41 7 ; Demott v. Stockton, 32 N. J. Eq. 124; Meyers v. Campbell, 59 N. J. 378; Moses v. Murgatroyd, 1 Johns. Ch. 119 ; Phillips v. Thompson, 2 Johns. Ch. 418 ; Haggarty v. Pittman, 1 Paige, 398; Keyes v. Brush, 2 Paige, 311 ; Pratt v. Adams, 7 Paige, 615; Curtis v. Tyler, 9 Paige, 432 ; Ten Eyck v. Holmes, 3 Sandf. Ch. 428 ; Vail v. Foster, 4 N. Y. 312 ; Merchants' Bank v. Comstock, 55 N. Y. 24 ; Crosby v. Crafts, 69 N. Y. 607 (affirming s. c. 5 Hun, 327) ; Nat. Bank v. Bigler, 83 N. Y. 51 ; Merchants' Bank v. Cumings, 149 N. Y. 360 (affirming s. c. 79 Hun, 397) ; City of Albany v. Andrews, 29 N. Y. Ap. Div.20; Wiswell v. Potts, 58 N. Ca. 719; Bank v. Jenkins, 64 N. Ca. 719 ; Matthews v. Joyce, 85 N. Ca. 258; Ijames v. Gaither, 93 N. Ca. 358; Sherrod CHAP. IV.] EX PARTE WARING ET ALS. 621 WARING, INGLIS, CLARKE, Ex parte. In Chancery, . before Lord Eldon, C, April 25, 1815. [Reported in 2 Glyn $• Jameson, 404.] Bracken & Co. were manufacturers in Lancashire. Brickwood & Co., bankers in London, were the bankers of Bracken & Co. Bracken 6 Co. opened their account with Brickwood & Co. upon an agreement that Bracken & Co. should deposit with Brickwood & Co. such bills of v. Dixon, 120 N. Ca. 60; Ohio Co. v. Eeeder, 18 Oh. 35; Grant v. Ludlow, 8 Oh. St. 1; Pendery v. Allen, 50 Oh. 120; Coons v. Clifford, 58 Oh. 480; Cornwell's Ap., 7 W. & S. 305 ; Kremer's Ap., 37 Pa. 71 ; Worrall's Ap., 41 Pa. 524 ; Rice's Ap., 79 Pa. 168; Mifflin's Ap., 98 Pa. 428; Harmony Bank's Ap., 101 Pa. 428; Aldrich v. Martin, 4 R. I. 520; Thompson v. Taylor, 12 R. I. 109; Breedlove v. Stump, 3 Yerg. 257 ; Kirkman v. Bank of America, 2 Cold. 397 ; Kinsey v. McDearmon, 5 Cold. 392 ; Saylors v. Saylors, 3 Heisk. 525; Ray v. Proffett, 15 Lea, 517 ; Walker v. Oglesby, 85 Tenn. 321 ; First Bank v. Wheeler, 12 Tex. Civ. Ap. 489; Magill v. Brown (Texas Civil Appeals, 1899), 50 S. W. R. 143 (sernble) ; Paris v. Hulett, 26 Vt. 308 ; Morrill v. Morrill, 53 Vt. 74 ; Hopewell v. Cumberland Bank, 10 Leigh, 206; Virginia Bank v. Boisseau, 12 Leigh, 387 ; Schmelz v. Rix, 95 Va. 509 (sernble). In some jurisdictions the creditor's right to the surety's securities does not arise until he has obtained a judgment against the surety. Importers' Bank v. McGhee, 88 Ga. 702 (statutory) ; Ohio Co. v. Reeder, 18 Oh. 35; Grant v. Ludlow, 8 Oh. St. 1. In some States the creditor's right to a mortgage given to the surety by the prin- cipal is dependent upon a breach of the condition of the mortgage by the principal's default. If, for example, the condition is that the principal shall pay the debt to the creditor when due, the creditor's right to the security is established, if the principal fails to pay the debt at maturity. Ross v. Wilson, 15 Miss. 753 ; Bibb v. Merton, 22 Miss. 87 (sernble) ; Bush v. Stamps, 26 Miss. 463 {sernble) ; Carpenter v. Bowen, 42 Miss. 28. If, on the other hand, the condition is that the principal shall reimburse the surety for his payment to the creditor, the mortgage will never be accessible to the creditor. Daniel v. Hunt, 77 Ala. 567, 569-570; Osborn v. Noble, 46 Miss. 449; Pool v. Doster, 59 Miss. 258; Clay v. Freeman, 74 Miss. 816. In Connecticut the creditor cannot profit by the surety's security, if the surety is indebted to the principal to an amount equal to that of the suretyship obligation. Homer v. Savings Bank, 7 Conn. 478. Security given by the principal to the surety upon an express trust for the creditor. — If the security is conveyed to the surety expressly upon trust for the payment of the debt to the creditor, the creditor's rights therein are like those of any other cestui que trust. Ex parte Gledstanes, 3 M. D. & D. 109 ; Inman v. Clare, Johns. 769 ; Bank of Ireland t7. Perry, L. R. 7 Ex. 14; Ex parte Dewhurst, 8 Ch. 965 ; Banner v. Johnstou, L. R. 5 H. L. 157 ; Branch v. Macon Co., 2 Woods, 385 ; Ohio Co. v. Ledyard, 8 Ala. 866 ; Branch Bank v. Robertson, 1-9 Ala. 798; Pierce v. Robinson, 13 Cal. 116; Hartford Co. v. First Bank, 46 Conn. 569 ; Constant v. Matteson. 22 111. 546 (sernble) ; Nat. Park Bank v. Halle, 30 111. Ap. 17 ; Loehr v. Colborn, 92 Ind. 24 ; Cooper v. Middle- ton, 94 N. Ca. 86 ; Green v. Dodge, 6 Oh. 80 ; Jack v. Morrison, 48 Pa. 113 ; Wood v. Moore, 1 Tenn. Cas. 116 ; Roberts v. Colvin, 3 Grat. 358 ; Schmelz v. Rix, 95 Va. 509. Security qiven to the surety with power to sell and apply the proceeds in payment of the debt due to the creditor. — The right of the creditor to reach the security was recognized in the following cases in which the surety had not only the right to indemnify himself after payment to the creditor, but also the power to apply the security in discharge of his liability to the creditor. Cullum v. Branch Bank, 23 Ala. 797 ; McMullen v. Neal. 60 Ala. 555; Daniel v. Hunt, 77 Ala 567; Smithy. Gillam, 80 Ala. 296; Homer v New Haven Bank, 7 Conn. 478 (sernble) ; Haveu v. Foley, 18 Mo. 136. — Ed. 622 EX PARTE WARING ET ALS. [CHAP. IV. exchange and notes as the}', Bracken & Co., should receive in the course of their dealings ; and should be at liberty to draw upon Brick- wood & Co., from time to time, as their occasions might require; Bracken & Co. always leaving a surplus in the hands of Brickwood & Co., and paying a commission to Brickwood & Co. on their accept- ances. Bracken & Co. also deposited with Brickwood & Co. some title- deeds of an estate, as a collateral security for an}' advances made, or to be made, by them. On the 7th of July, 1810, a commission of bank- ruptcy issued against Brickwood & Co. At the time of this bankruptcy Brickwood & Co. had acceptances outstanding to the amount of £23,600; they were indebted to Bracken & Co. for cash, £6,776 ; they held short bills of Bracken & Co. to the amount of £23,800, and the title-deeds of an estate worth £2,961 ; so that the account between Bracken & Co. and Brickwood & Co. was as follows : — Brickwood Sf Co. Dr. Cash .... Short bills . . Title-deeds . . £ s. d. Cr 6,776 Acceptance 23,800 2,961 £ s. d. 23,600 On the 2d of August, 1810, a commission of bankruptcy issued against Bracken & Co. Brickwood's acceptances were proved under both com- missions. The bill-holders presented a petition, insisting that they were entitled to have the cash, the short bills, and the produce of the title-deeds applied in liquidation of their bills. The assignees of Bracken & Co. presented a petition, praying that the assignees of Brickwood & Co. should deliver to the assignees of Bracken & Co. the short bills, and £2,961, the produce of the title- deeds, upon the assignees of Bracken & Co. indemnifying the assignees of Brickwood & Co. against any dividends which they might be liable to pay upon the outstanding acceptances to the amount of £16,824, the difference between the whole amount of the acceptances and the cast balance. Mr. Leach and Mr. Cooke, for the bill-holders. Sir Samuel Momilly and Mr. Trower, for the assignees of Brick- wood & Co. If the acceptor of a bill hold the notes of the drawer in trust for the holder, the holder will be entitled to a discovery to restrain the nego- tiation of the notes : and the unvaried practice in the mercantile world for bankers to return such bills, if required so to do by their employers, is a breach of trust. But if these equities are to attach upon bills of exchange, wiry are they to be confined to bankers' bills? — will they not be applicable to every species of bill? for instance, to a bill ac- cepted by a factor, a warehouseman, on account of his principal, and so for every other bill. When a surety holds security, the contract between the creditor and his debtor is merely personal ; he relies upon the responsibility of the debtor and of his surety. The contract between the debtor and his surety is not merely personal ; the suret}' insists upon security of prop- CHAP. IV.] EX PARTE WARING ET ALS. 623 erty. What power can a court of equity possess to convert this contract between the creditor and debtor into a contract not merely personal, but a contract for security. For these reasons, as this note [of Maure v. Harrison] is to be found only in this abridgment ; as it has not been confirmed by any decision since 1692 ; and as there is no equity to support it, we submit that it is mistaken law ; and even if it is not, it does not apply to the case now before the court, of bills of exchange thus deposited with a banker. (The Lord Chancellor said, " I have never heard this case relied upon as a governing case at this day.") 1 The Lord Chancellor, after stating the petitions, said : — The relief prayed by the bill-holders is on this alleged ground, that the short bills and the mortgages (I leave the cash out of the question for a moment), having been paid into the hands of Brickwood & Co. as a security against their acceptances, the holders of such acceptances have an equity to insist that the short bills and the mortgage shall be applied specifically to the purpose of discharging these acceptances, upon the supposition that, in a transaction of this nature, the bill- holders have a right to the benefit of a contract between the party indemnifying and the party indemnified, although no parties themselves to the contract ; or, in other words, that the} r who have contracted out of these deposits to paj- certain debts, are liable in equity to the de- mands of the persons to whom payment is to be made ; and there is a case in equity which goes this length. It will be sufficient for me to say, that, supposing a commission not to have issued, I do not see anything in this transaction, between persons thus dealing with their bankers, and making a deposit of this sort, which would entitle the creditors to say that they have an equity attaching on these effects ; that is to sa} T , that, the moment a pledge is put into the hands of the banker, he becomes a surety for them to whom his acceptances are delivered. If there were such an equitj', the consequence must be, that the banker and the person whose depositary he is could come to no new arrange- ment without the consent of the creditors. It is enough for me to say, that the petition cannot be supported upon this ground. Whether there is any other ground upon which it ma}' be supported, will depend upon the view which I have taken of this case, and the opinion which I have formed, after much thought, although not with much confidence. My view is this : On the 7th July, 1810, Brickwood & Co. became bank- rupts. Bracken & Co. remained out of a state of bankruptcy until the 2d da}' of August, 1810. The first question then is, " What was the nature of the demand which Bracken & Co. had on Brickwood & Co. from the 7th of Jul}' to the 2d of August. Now it is impossible to deny that, if Bracken & Co. had relieved Bi'ickwood & Co. from their acceptances, the short bills and the mortgage must have been restored to Bracken & Co. On the other hand, I take it to be equally clear that Bracken & Co. never could have any demand on the estate of Brick* 1 The argument for the assignees is much abridged. — Ed. 624 EX PARTE WARING ET ALS. [CHAP. IV. wood & Co. for the short bills and mortgage, without bringing into tha estate of Brickwood & Co. funds equal to the claim which Brickwood & Co. had on the short bills and the deeds, not for the security of the bill-holders, but from the relative situations of Bracken & Co. and Brickwood & Co. The next question is, whether the nature of the case is in any and what respect altered b} T the bankruptcy? I cannot discover any differ- ence. It appears to me that the assignees of Bracken & Co. are bound to leave the estate of Brickwood & Co. in the same situation as Bracken & Co. were themselves bound before the bankruptc}'. On the best consideration I have been able to give to the question, with reference to the rights of all the creditors under the commission, and with regard to the bankrupts themselves, it does appear to me, that in this circuitous wa} T the persons holding the acceptances must be paid, not because they are demands, but because it is the true way of clearing the estates. I do not know that I am clearly stating what I mean, but I think the principle on which I go is right ; and which brings me back to the opinion of Mr. Cook, on a former occasion expressed by him, though, at that time, somewhat different from mine. After this, per- haps, you will have no great difficulty in drawing out minutes that will apply to these different petitions. An order was made, by which the payment was made to the bill- holders. 1 1 Ex parte Parr, Buck, 191 ; Powles v. Hargreaves, 3 D. M. & G. 430 ; Ex parte Carrick, 2 De G. & J. 208 ; City Bank v. Luckie, 5 Ch. 773 ; Bank of Ireland v. Perry, L. R. 7 Ex. 14 ; Ex parte Smart, 8 Ch. 220; Ex parte Dewhurst, 8 Ch. 965 ; Vaughan v. Halliday, 9 Ch. 561 ; Banner v. Johnston, L. R. 5 EL L. 157 ; M'Mahon v. Fether- stonhaugh, Ir. R., 1895, 1 Ch. 182 (semble) ; Lewis v. De Forest, 20 Conn. 427, Accord. In Powles v. Hargreaves, supra, Lord Cranworth, referring to Ex parte Waring, said, p. 448 : " The question seems to have been argued very fully and at great length, and Lord Eltlon held that there was such a right, — not, he said, ' in the nature of a direct demand ' by virtue of any distinct and independent equity existing in the bill- holders to claim a lien on that which had been deposited by the principal debtor with the surety ; if that were so, they would have had a right at all times upon the bills so deposited, and to have said, nobody shall deal with these bills except as we choose to permit, a proposition utterly untenable." In Vaughan v. Halliday, supra, James, L. J., said, p. 567 : " The principle of Ex parte Waring applies where there are equities to adjust between two parties who be- come insolvent, and the adjustment of which equities, by a piece of good luck, so far as a third party is concerned, operates for the benefit of such third party. . . . I desire, with reference to what the Lord Justice [Mellish] has just said, to express my entire concurrence in his observations, that the right of proof against both estates in respect of the same matter is essential to the application of Ex parte Waring." In City Bank v. Luckie, supra, Lord Hatherley said, p. 776: "As long as both parties were solvent, he who gave the security, and he who received the security, might deal with the security just as they pleased, without any regard to who might be the bill-holders. But when there came to be a question whether the bills were to be paid or not, it was impossible for the estate, which claimed the value of the security, subject to the charge, to get back the security, unless all the duties that attached to it had been fulfilled. On the other hand, the other estate was not in a condition to make payment of the bills, and thus to come upon the security for indemnity. Therefore matters stood at a deadlock, and nothing could be done on one side or the other." — Ed. CHAP. IV.] ROYAL BANK V. COMMERCIAL BANK. 625 THE ROYAL BANK OF SCOTLAND, Appellants, v. THE COMMERCIAL BANK OF SCOTLAND and Others, Respondents. In the House of Lords, July 10, 1882. [Reported in Law Reports, 7 Appeal Cases, 366.] Lord Sklborne, L. C. 1 My Lords, this is an appeal in an action of multiplepoinding, arising out of two Scottish bankruptcies, the one of a person named Saunders, who failed in November, 1878, and the other of a person named Ramsay, who failed in December of the same } - ear. These two parties had dealings together, Ramsay sending raw material (jute, flax, &c.) to Saunders' spinning works, to be converted into yarn, under an agreement in writing, which provided that all materials and yarn at Saunders' works should continue to be the sole property of Ramsay, subject to the lien of Saunders for whatever might from time to time be due to him, and that Saunders should give acceptances for a sum not exceeding three-fourths of the value of the raw material held by him on Ramsay's account, and should be entitled to " a right of lien or retention of goods to a value sufficient to cover such acceptances." At the time of such bankruptc}' Saunders was liable as acceptor, upon the footing of this agreement, on bills drawn by Ramsay to the amount of £16,000, and he held goods belonging to Ramsay (since sold for £4,025 14s. 2c?.) on which he had a right of lien or retention, to indemnify him from that liability. The appellants are the holders of the £16,000 bills, and, as such, have proved, or have a right of proof, against both the insolvent estates. In the court below they claimed to have the whole proceeds applied, in the first place, in payment of the bills, as far as they would extend, so as to reduce the amount of their proof against the two estates to about £12,000 instead of £16,000, relying, for that purpose, upon the English case of Ex parte Waring, That claim was rejected by the Court of Session, from whose judgment the present appeal is brought. 2 1 Only the judgment of Lord Selborne, together with a portion of those of Lord Blackburn and Lord Watson, is given. — Ed. 2 The Lord President said, in part : " The Royal Bank in the present case, ranking for the full £16,000 on the estate of Saunders, will receive a dividend on that amount pari passu with the other unsecured creditors of Saunders. The estate of Saunders will then he entitled to be indemnified out of the price of the impledged goods to the amount of the dividend so paid, and the sum thus obtained as indemnity will then become an asset of Saunders' estate, out of which the Royal Bank and the other creditors of Saunders will receive a further dividend, and this process will be repeated until the price or value of the goods has been exhausted. If the value had exceeded the amount of the bill debt, the process would have been continued till the bill debt was extinguished, and the acceptor's liability discharged by full pay- ment, and the balance, if any, of the price or value of the impledged goods would be 40 826 ROYAL BANK V. COMMERCIAL BANK. [CHAP. IV. The rule laid down by Lord Eldon in Ex parte Waring, and eon- firmed by subsequent decisions of the English courts, is now well established in England ; but this cannot be a sufficient reason why your Lordships should also hold it to be the law of Scotland, unless it can be shown that its application to the circurnstanees of sueh a case as the present, in the manner for which the appellants contend, is re- quired b\' those principles of equity which are common to the jurispru- dence of both parts of the United Kingdom. The laws which govern the administration in bankruptcy or insolvency are not in all respects the same in Scotland as in England. The rule in question has not, down to the present time, been received or known in Scotland, though it is nearly seventy years since Ex parte Waring was decided. The judges of the Court of Sessions, whose opinions are now under review, all think that if such a rule were applied, under the circumstances of the present case, it would result in consequences not only not required by an}' principle of equity, but practically inequitable. After care- fully considering the arguments which have been addressed to your Lordships, I am unable to differ from that conclusion. It is conceded (and it has always been so laid down by all the Eng- lish authorities) that bill-holders cannot claim to have securities, de- posited with the acceptors by the drawers for the acceptors' indemnity, applied in payment of the bills by virtue of any right or title of their own to the benefit of those securities. They can, at the utmost, only returned to the estate of Ramsay, the owner of them. But whatever may be the relative amount of the bill debt and the value of the goods impledged, the principle is the same ; the subject of the pledge (in strict conformity with the contract of pledge) is applied exclusively to indemnify the pledgee and his estate for what lie and it have been made to pay in respect of his liability as acceptor. " No doubt the bill-holder in such a case may obtain an incidental advantage from the security that the acceptor has over the drawer's goods. For the bankrupt acceptor and his estate being undoubtedly entitled to resist any demand by the drawer and his trustee to have back the goods till the last farthing of the debt for which he is liable be paid, the bill-holder, to the extent to which the acceptor is enabled to pay by working out his right of indemnity, has indirectly to some extent the benefit of the pledge. " But this result is brought about, not by virtue of any security held by the bill- holder, or of any active title in him to affect the goods impledged, but through the natural operation of the contract of pledge, putting the bankrupt pledgee in a better position to meet his obligation as acceptor than he would have been if he had no such power to indemnify himself at the expense of the drawer and pledger. The result thus brought about does not put the bill-holder in the position of a secured creditor of the bankrupt acceptor or of the bankrupt drawer, nor has he any preference in either bankruptcy. In ranking on the drawer's estate he ranks pari passu with the drawer's other unsecured creditors, and in ranking on the acceptor's estate he gets no more benefit from the proceeds of the impledged goods than the other unsecured creditors of the acceptor. " The result seems perfectly equitable. The subject of the pledge is made avail- able to the estate and the creditors of the pledgee, as an indemnity to the extent to which it and they are made to pay money to the bill-holder in a way precisely corre- sponding to that in which the pledgee would have been entitled to work out his indent nity if he had remained solvent." — Ed. CHAP. IV.] ROYAL BAXK V. COMMERCIAL BANK. 627 claim to come in under a, jus tertii, availing themselves of the adminis- tration of the insolvent estates (in which they have the ordinary locus standi of creditors), to ask that the securities, which would be assets of the one estate but for the lien and right of indemnification belong- ing to the other, but which cannot be realized until that lien and right of indemnification is discharged, may be so applied as to give effect to the contract between the drawers and the acceptors, in the way most conveniently practicable. If the securities were sufficient, or more than sufficient, to cover the whole amount of the acceptances, the acceptors would be fully indem- nified by the application of those securities to the payment of the bills ; and the drawers (or those representing their estate) might in that case be entitled to require that they should be so applied ; while, on the other hand, they could not be entitled to reclaim any part of those securities without (in that or some other way) fullv indemnifying the acceptors. It may well be that, under such a state of circumstances, the appropriation of the securities according to the rule in Ex parte Waring (both drawers and acceptors being insolvent) might be the most conveniently practicable way of giving effect to the contract between the drawers and the acceptors. This was in fact the state of circumstances which (so far as an opin- ion can be formed, either from the report in 19 Vesey, or from that in 2 Rose) was directly in the contemplation of Lord Eldon when his judgment in Ex parte Waring was pronounced ; and there is an im- portant passage in that judgment which I cannot myself reconcile with the supposition that the equit} r there stated could have the consequences contended for by the appellants in the present case. I cite it from Mr. Rose's, which seems to me the better report. " It is impossible to deny that if Bracken & Co. had relieved Brickwood & Co. of the ac- ceptances for £24,000, the short bills and the mortgage must have been restored to Bracken & Co. On the other hand, I take it to be equally clear that Bracken & Co. never could have redemanded the short bills or the mortgage without bringing in, under the estate of Brickwood & Co., funds equal to the claim that Brickwood & Co. had in respect of the short bills and the mortgage ; for they were first applicable to the discharge of those acceptances, not for the security of the persons in whose hands those acceptances were, but for that of Brickwood & Co., who had become liable upon them. The liability of Brickwood & Co. must be exonerated before any restitution could be claimed by Bracken & Co. That being the nature of the question from the 7th of July, 1810 (the date of Brick wood's bankruptcy), to the 2d of August, 1810 (the date of Bracken's bankruptcy), the consid- eration arises how far it is altered by the bankruptcy of Bracken & Co. Now, if the assignees of Bracken & Co. are bound to leave the estate of Brickwood & Co. in the same condition as Bracken & Co. were bound to have done before the bankruptcy (and they certainly would be obliged to put the estate of Brickwood & Co. in that condition, in 628 ROYAL BANK V. COMMERCIAL BANK. [CHAR IV. order to entitle themselves to the securities), I do not see how the bankruptcy varies the question." That is the passage in Lord Eldon's judgment. I apprehend it to be clear that Bracken & Co. would not have been entitled, either before or after the bankruptcy of Brick wood & Co., to prescribe in any way to Brickwood & Co., or their assignees, an}* par- ticular mode of appropriating part of the securities, whether b} - pay- ing off some (but not all) of the bill-holders, or by paying a dividend to all the bill-holders, leaving Brickwood & Co.'s estate still liable for the balance, much less could they have done so under such circum- stances as those of the present case, in which the securities (though it was the intention of the contract that they should be sufficient to cover the acceptances) fell far short of the required amount. To confer a benefit upon the bill-holders, who are no parties to the contract, at the expense of the acceptors, and so to deprive the acceptors, to any ex- tent, of an} r part of the indemnity for which they have contracted (whether the drawers or their creditors are also benefited b}' that devia- tion from the contract or not), must be (as the Court of Session has considered it) inequitable ; nor could it be reconciled, in my opinion, with the reasoning of Lord Eldon's judgment. It is true, as was stated by Lord Cranworth in Powles v. Hargreaves, 1 that the order in Ex parte Waring, as drawn up, " distinctly provided for the case of the short bills deposited either being equal or more than sufficient, or being insufficient, and expressly provided that, if insuf- ficient, the parties holding the acceptances were to prove for the defi- ciency." The authority of Lord Eldon in the English courts of equity and bankruptcy was very great ; and it is, therefore, in no way sur- prising that, after the lapse of nearly forty years, the form of order drawn up to carry his judgment into effect should have been regarded as conclusive in a similar case, and should have been (perhaps too readily) assumed to be consistent with the reasons assigned for that judgment. No man could entertain a more sincere respect than I have always done for the very eminent and learned judge who decided Powles v. Hargreaves ; l and I assume, for the purpose of the present judgment, that the positive rule of administration, which has been accepted as law in England since the order in Ex parte Waring was made, must be understood in accordance with the determination in Powles v. Hargreaves. 2 But, so far as it is a positive rule of admin- istration, and not the necessaiy result of equitable principles, it cannot be held to be of force in Scotland merely because it is so in England. Of the reasons assigned by Lord Cranworth 3 to justify the extension of the rule to the case of a deficient security, I cannot but saj r that they are unsatisfactory to my mind, if applied to such a contract as that between Ramsay and Saunders in the present case ; and indeed they «ppear to me to overlook the fact that, when the whole benefit of 1 3 D. M. & G. at p. 453. 3 3 D. M. & G. 430. •3D.M.&G. at p. 446. CHAP. IV.] ROYAL BANK V. COMMERCIAL BANK. G29 a deficient security is given to the bill-holder, the estate of the bank- rupt acceptor may lose some part of the indemnity to whic'ii, by the contract, he is entitled. If, in the case before 3'our Lordships, the whole fund in medio were applied in the first instance towards payment of the bills held by the appellants, and the appellants were then admitted to prove against both the insolvent estates for the difference, viz., £12,000, the practical result would be, to leave the respondents without any indemnity at all for the dividends which might be paid out of their estate on that £12,000. The result, on the other hand, of the decision of the Court of Session is to indemnify them to the full extent of the fund (as, under tlie contract, they have a right to be indemnified) for every shil- ling which their estate may pay on the bills. Suppose the estate of Saunders to pay a dividend of 5s. in the pound, this on £16,000 would be £4,000, and the trustee of that estate would have a right, according to the judgment appealed from, to have the whole fund in medio (being, in round figures, £4,000) applied for their reimbursement. But if the fund in medio were first applied in payment of the bill- holders, Saun- ders' estate would then pay on the remaining £12,000 (at 5s. in the pound) £3,000 without any indemnity at all. Can there be a doubt which of these results is the more equitable? The one violates, the other gives effect to, the contract. What right can the bill-holders have to ask that it should be violated for their benefit? What right could the trustee of Ramsa}', the debtor primarily liable under the contract, have to ask for any appropriation of the securities which would take awa}* from Saunders' estate any part of the indemnity for which he contracted, and at the same time leave that estate liable on the greater part of the bills ? With respect to the argument from convenience, in some possible circumstances (as when the part}' secured might have no assets of his own, so as to pa}' any dividend, and yet might for some reason fail to get his discharge, or when he might have assets falling by driblets, so as to pay repeated dividends at uncertain intervals, without exhausting the security fund) it is enough to say that a sufficient practical answer seems to me to be given to that argument in the opinion of one of my noble and learned friends, which I have had the advantage of seeing in print. It is impossible that mere inconvenience or delay in working out the security can make it necessary or just to infringe the contract in favor of persons who are strangers to it. I therefore move your Lordships to dismiss this appeal with costs. Lord Blackburn. An argument was submitted b}' Mr. Benjamin that on the true construction of this agreement the holders of the out- standing bills had a specific hold on this propert}'. I think, agreeing therein with all the judges below, that this agreement gave the holders no security whatever over the goods either in the hands of Saunders whilst sui juris, or in the hands of his trustees. It did give Saunders whilst sui juris a right to retain the goods until he was indemnified 630 ROYAL BANK V. COMMERCIAL BANK. [_CHAP. IY< against any claim made on him by the holders of the bills, and it left to Ramsay a right to remove those goods and deal with them in any wa}" he pleased, so soon as he had in any way satisfied all claims that were made or could be made upon Saunders, for which he had by agreement a right to retain the goods, but not, except by Saunders' consent, till then. No doubt this considerably increased the proba- bility that the bills would be taken up, and so indirectly gave the bill- holders a better seeurit}', but it was only indirectly ; if Ramsa} T and Saunders, whilst sui juris, had chosen to abrogate the agreement of the 22d of April, 1870, and appropriate the goods to any other purpose they pleased, the holders of the bills could not have prevented them. If we view the matter as it would be when the whole value of the assets forming the estate of the firm holding the security, and also the whole amount of the unsecured creditors, exclusive of the bill-holders, are ascertained, the justice of the case seems plain enough. The cred- itors of that estate (in this case that of Saunders), exclusive of the bill- holders, can never have a claim to a greater dividend than they would receive if the bills were paid off. If the amount of that dividend on the bills would not exceed the proceeds of the security, the unsecured creditors and the bill-holders should take that dividend, and so much of those proceeds of the security as will indemnify the estate against the dividend thus paid to bill-holders should be applied for the benefit of the estate, the surplus over that amount being applied for the benefit of the creditors of the other estate. If the proceeds of the security are not sufficient to pay so much they should be applied as far as they will go for the benefit of that estate, and the dividend be reduced to that amount which the estate could pay after that. In that case there would be no surplus to apply for the benefit of the other estate. It seems to me that this would be perfect equity, remembering that the right of the creditors on the estate against the proceeds of the security is to an indemnity only, and that the}* have no right to make a profit. Lord Watson. It was argued for the appellants that it is desirable to have a uniform rule in all cases like the present, and that the prin- ciple adopted by the Court of Session would, in very many instances, lead to inextricable confusion, and would, in others, occasion grave inconvenience. It was urged, in the first place, that the system of recouping dividends paid to the bill-holders would lead to an inter- minable declaration of dividends, each sum recovered by way of in- demnity becoming a new fund for division among the creditors ; and, in the second place, that, if the indemnity fund were not at once exhausted, the reversionaiy interest of the creditors of the drawer would lead to his sequestration being indefinitely suspended, in the event of the acceptor being unable to procure his discharge. I agree with the appellants' argument, that one and the same principle ought to regulate all cases like the present ; but it appears to me that the difficulties which have been suggested, in regard to the principle CHAP. IV.] ROYAL BANK V. COMMERCIAL BANK. 631 upon which the Lord Ordinary's interlocutor proceeds, are not very formidable. The subject of the acceptor's lien, when converted into money by consent of parties, or by warrant of the court, becomes a fund to which he may legitimately resort, in order to avoid the necessity of making payment out of his own pocket, and the trustees for his creditors are entitled to use it for payment of dividends upon the debt for which it is retained, in order to protect his estate from the claim of the creditor in that debt. When the amount of the assets available for dividend has been ascertained, nothing can be more simple than to calculate once for all what sum must be taken from the fund in order to obtain indemnity, without resorting to the totles quoties method, which the appellants seemed to consider indispensable. In the present case the respondents have merely to ascertain the dividend which Saunders' estate will yield to creditors other than the appellants, and then pa}' to the appellants, out of the indemnity fund, a corresponding dividend upon their claim. If the fund prove insufficient for that purpose, they will add it to the dividend fund and divide the total between the creditors of Saunders including the appellants. By one or other of these processes the respondents will, uno Jlatu, obtain the full measure of relief to which the}' are entitled under the agreement, and no more. The other difficulty suggested by the appellants is equally devoid of substance. Should the acceptor be unable to procure his discharge his creditors would, no doubt, by the judgment under appeal be entitled to retain their hold upon the fund, in case of future dividends becoming payable from estate subsequently accruing to the bankrupt ; and it might be productive of very great hardship and inconvenience if that state of matters necessarily prevented the creditors of the drawer from bringing his sequestration to a close. I cannot, however, conceive why the circumstance that an interest such as Ramsay's creditors have in the fund in medio forms one of the assets of the bankrupt estate should necessarily delay the winding-up of the sequestration. The trustee, with the concurrence of the commissioners, may either enter into a compromise with the party entitled to retain, or he may sell the interest for ready money. It frequently happens that a bankrupt estate consists in part of reversionary, and, it may be, contingent rights; and, when that is the case, it is for the trustee and the com- missioners to consider and determine whether it is for the interest of the general body of creditors to realize at once or to prolong the sequestration. Appeal dismissed. 1 1 The difference between the Scotch and English rules appears from the following comparison taken from the statement of facts. — Ed. State I. 1. Saunders' Estate. — Liabilities. (1 ) Creditors other than the Royal Bank, say . £24,000 (2) The Royal Bank 16,000 ° ° £40,000 O O 632 ROYAL BANK V. COMMERCIAL BANK. [CHAP. IV. Assets. General assets (in which value of security subjects is not in- cluded), say £9,000 (= 4s. 6f/. per pound on liabilities.) 2. Security subjects, realized value, say £4,000 3. Saunders' trustees propose, out of the general assets (as above) in their hands, to pay a first dividend of 4s. 6c/. in the pound on all claims, including that of the Royal Bank. The first dividend payable to the Royal Bank at 4s. 6d. per pound on £16,000 will be £3,600 O 4. After paying to the Royal Bank this first dividend of £3,600, Saunders' trustees claim to have the estate under their administration reimbursed to that amount out of the security subjects held for their relief. If this claim is sustained the sum of £3,600 will be restored to the estate, and will be available with any other accruing funds for a second distribution. 5. Assume that there are no other funds available for a second dividend than this £3,600. The estate will then pay a second dividend of about Is. 9c/. per pound. 6. A second dividend at Is. 9d. on the Royal Bank's claim will be £1,400 7. Having paid the Royal Bank a second dividend of £1,400, Saunders' trustees claim to have the estate under their administration reimbursed to that extent, out of the security subjects held for their relief. The security subjects being now reduced to £4,000 — £3,600 = £400, Saunders' estate will" only recover therefrom £400 of this second dividend of £1,400. But that sum of £400 will become available for a third dividend. 8. Assume that there are no other funds available for a third dividend than this £400, the estate will pay a third dividend of about 2\ per pound on the claims. 9. The Royal Bank will receive a third dividend at 2| per pound, or £160 10. As the security subjects are already more than exhausted, Saunders' estate will not recover any part of this third dividend from the security subjects. The estate itself will also be exhausted, and no further dividends be paid. 1 1 . The result will be that the Royal Bank will receive in dividends — £3,600 1,400 160 £5,160 CHAP. IV.J SUMNER V. BACIIELDER. 645 AUSTIN SUMNER and Another v. JAMES R. BACHELDER. In the Supreme Judicial Court, Maine, 1849. [Reported in 30 Maine Reports, 35. J Shepley, C. J. 1 The plaintiffs are creditors of Hall & Turner. The defendant is the sheriff of this county. The action is trover brought to recover the value of certain goods attached and sold by a deputy of the defendant as the property of William G. Hall. It is admitted that he was formerly the owner of the goods. The plaintiffs claim to have derived their title to them from him. It was stated in argument that the defendant had exhibited no title. They exhibit a conveyance of the goods in mortgage made on December 29, 1847, and recorded in the town records on the following day by William G. Hall to Hall & Turner, upon condition to be void upon payment by William G. Hall of the sum of $1,343, being the amount of two notes described, given by William G. Hall to Hall & Turner ; and an assignment of that mortgage to themselves, made on February 7, 1848, and recorded in the town records the same day. The notes described in the condition were not produced. To prove that the mortgage was made for a valuable consideration, the plaintiffs introduced Charles O. Turner, of the firm of Turner & Hall, who testi- fied, in substance, that the mortgage was made to secure Hall & Turner for signing two promissory notes produced, as sureties for William G. Hall ; that Hall & Turner had no other notes against William G. Hall, that he recollected ; that the schedule annexed to the mortgage was made the day before the goods were attached ; that Hall & Turner had no other security than the mortgage for signing those two notes for William G. Hall. The notes produced were signed by William G. Hall and by Hall & Turner. One of them bearing date on November 12, 1847, was made payable to Sumner, Brewer, & Co., in four months with interest after, for the sum of $916.41. The other bearing date on December 28, 1847, was made payable to Little, Spear, & Co. in two months from date, for $426.11. Admitting that the parol testimony excluded should have been received, the whole proof as now presented under the motion shows cerned, it is difficult to see why B may not sell the horse, or, if he choose to surrender the indemnity, aud give the horse back to A ; that is, provided B is solvent and fully able to pay the debt ; for if B is insolvent and is about to make way with the fund, it is a fraud on C which the Court will prevent, by converting B into a trustee of the fund for the benefit of C. In the latter case the equity is clear, but in the former I confess my inability to see any ground on which an equity can rest. If the surety be not insolvent, how does it concern the creditor what he does with the indemnity fund?" — Ed. 1 Only a portion of the opinion of the Court is given. — En 646 SUMNER V. BACHELDER. [CHAP. IV. that the mortgage was made, or that it was intended to have been made, to indemnify Hall & Turner for becoming sureties for William G. Hall on the two notes first named. The question is therefore still presented, whether at the time of the trial the plaintiffs had such a title to the goods that they could maintain their action. They had before that time, on October 7, 1848, by an instrument under their hands and seals, released Hall & Turner " from any and all liability," " by reason of their having assumed, as surety or other- wise, any responsibility to our said firm for or on account of William G. Hall." It is therefore obvious that they could maintain no action against Hall & Turner founded upon those two notes. The liability of Hah & Turner to pay those notes had been by their release extinguished. Nothing had been paid upon them. Hall & Turner acquired by the mortgage from William G. Hall a conditional title to the goods, liable to be defeated by the termination or extinguishment of their lia- bility to pay those notes. That title and no other could they convey to the plaintiffs. They did not attempt to convey any other. They only assigned the mortgage and the title to the goods, which they had acquired by it. No absolute title to the goods was at any time conveyed or attempted to be conve3 T ed by William G. Hall to Hall & Turner, or by them to the plaintiffs. There may be a difference of opinion, whether the title to real estate conveyed in mortgage, upon payment or discharge of the debt or lia- bility secured b} 7 the mortgage after condition broken, would revest in the mortgagor without a reconveyance or release or cancellation of the mortgage. But although the title to personal property conveyed in mortgage becomes absolute in the mortgagee upon failure to per- form the condition within the time limited and extended, b}- the statute of this State, c. 125, § 30 ; yet if the mortgagee or his assignee after- ward accept payment of the debt, or discharge the liability secured by the mortgage, the title revests in the mortgagor without a redelivery or resale and without a cancellation of the mortgage. Butler v. Tufts ; 1 Flanders v. Barstow ; 2 Paid v . Hay ford ; 3 Greene v. Dingley ; 4 Leigh- ton v. Shaple}' ; 5 Parks v. Hall ; 6 Barry v. Bennett ; 7 Patchin v. Pierce ; 8 Harrison v. Hicks. 9 It is true, that the introduction of a mortgage made to indemnify a suret}', after proof of its execution, has been held to be prima facie evidence of title. The same case also decides that such title will be avoided by proof introduced in defence, that the debt has been paid, or the liability of the surety discharged. Davis v. Mills. 10 1 13 Maine, 302. 2 18 Maine, 357. 3 22 Maine, 234. i 24 Maine, 131. * 8 N. H. 359. 6 2 Pick. 206. » 7 Mete. 354. 8 12 Wend. 61. 9 1 Port. 423. 10 18 Pick. 394. CHAP. IV.] HAMPTON V. PHIPPS. 647 In this case, the proof, that the sureties had been discharged from their liability, was introduced by the plaintiffs, and their title to the goods was thereby avoided. A new trial could not avail them. Nonsuit confirmed. 1 HAMPTON, Administrator, and Others v. PHIPPS. In the Supreme Court, United States, October Term, 1882. [Reported in 108 United States Reports, 260.] Bill in equity by a creditor to obtain the benefit of securities held by sureties of the principal debtor. The appellee, who was complainant below, was the holder, and filed his bill in equity, on behalf of himself and the other holders of bonds, executed and delivered by Theodore D. Wagner and William L. Trenholm, to the amount of $710,000, and paid to creditors in settlement of the liabilities of two insolvent firms, in which they were two of the copartners. These bonds were dated January 1, 1868. The payment of the principal and interest of each of these bonds was guaranteed, by writing indorsed thereon, by George A. Trenholm and James T. Welsman, who were sureties merely. These sureties entered into a written agreement each with the other, dated 1 Valentine v. Wheeler, 122 Mass. 566; Higgins v. Wright, 43 Barb. 461, Accord. Carlisle v. Wilkins, 51 Ala. 371 ; Phillips v. Thompson, 2 Johns. Ch. 418; Streeter v. Seigman (New Jersey Equity, 1900), 45 At. R. 908, Contra. In Hayden v. Smith, 12 Met. 511, the Court, while admitting that a release under seal given to the surety by the creditor would deprive the latter of all rights in the security assigned to him by the surety, decided that a parol agreement never to sue the surety would not have the same effect. Consistently with the principal case the discharge of the surety in any mode must deprive the creditor of all claim to any security given to the surety for his indemnity by the principal debtor ; e. g. : — Variation of the surety's risk by act of the creditor. — City of Albany v. Andrews, 29 N. Y. Ap. Div. 20; Schmelz v. Rix, 95 Va. 509. Failure of holder to exercise due diligence in charging indorser. — Tilford v. James, 7 B. Mon. 336 ; Hopewell v. Cumberland Bank, 10 Leigh, 206 ; Va. Bank v. Boisseau, 12 Leigh, 387. Discharge in bankruptcy. — Bush v. Stamps, 26 Miss. 463. But see contra, Forrest v. Luddington, 68 Ala. 1, 12 (semble). Discharge by Statute of Limitations. — Ex parte Morris, supra, 639; Russell v. La Roque, 13 La. An. 149; Phillips v. Thompson, 2 Johns. Ch. 418 {semble). But see contra, Forrest v. Luddington, 68 Ala. 1,12 (semble) ; Plant v. Storey, 131 Ind. 46, 49 (semble) ; Eastman v. Foster, 8 Met. 19 ; Holt v. Savings Bank, 62 N. H. 551 ; Ijames v. Gaither, 93 N. Ca. 358 ; Long v. Miller, 93 N. Ca. 227 ; Sherrod v. Dixon, 120 N. Ca. 60 (semble). Discharge by death of surety in a joint obligation. — But see contra, Crosby v. Crafts, 5 Hun, 327, affirmed in 69 N. Y. 607. Satisfaction of surety's liability. — If a surety for a part of the principal's debt pays that part, the creditor has no claim to security held by the surety for his indemnity. Van Orden v. Durham, 35 Cal. 136; Sherrod v. Dixon, 120 N. Ca. 60. — Ed. 648 HAMPTON V. PHIPPS. [CHAP. IV. May 3, 1869, in which it was recited that, in becoming parties to said guaranty, they had agreed between themselves that the said George A. Trenholm should be liable for the sum of $400,000, and the said James T. Welsrnan for the sum of $310,000, of the aggregate amount of the bonds, and no more, and that each would be respectively liable to the other for the full discharge of the said sum and propor- tion by them respectively undertaken, and that each would save and keep harmless and indemnify the other from all claim, by reason of the said guaranty, beyond the amount or proportion respectively assumed, as stated; and it was thereby further agreed that, at any time when either of them should so require, each should, by mort- gage of real estate, secure to the other more perfect indemnity, be- cause of the said guaranty. Thereupon, and on the same date, each executed to the other a mortgage upon real estate of which they were respectively the owners, the condition of which was that the mortgagor should perform on his part the said agreement of that date. The guarantors, as well as the principal obligors, had become insol- vent before the bill was filed. It also appeared that, of the sum of $573,300 due on account of outstanding bonds, George A. Trenholm, one of the guarantors, had paid $108,454, leaving still due from his estate to make good the pro- portion assumed by him, $214,532; and that the proportion for which the estate of James T. Welsrnan, the other guarantor, was liable, was $250,314, of which nothing had been paid. The appellees claimed that the mortgages interchanged between the guarantors inured to their benefit as securities for the payment of the principal debt, and prayed for a foreclosure and sale for that purpose. This was resisted by the appellants, one of whom, Hampton's administrator, as a judgment creditor of George A. Trenholm and James T. Welsrnan, claimed a lien on the mortgaged premises; the others, executrixes of James Welsrnan, deceased, being subsequent mortgagees of the same property. A decree passed in favor of the complainants, according to the prayer of the bill, from which appeal was taken. Mr. Theodore G. Barker and Mr. W. G. De Saussure for appellants. Mr. James Lowndes for appellee. Mr. Justice Matthews delivered the opinion of the Court. After reciting the facts in the above language, he continued: — The ground on which the Court below proceeded seems to have been that the mortgages given by the co-sureties, each to the other, were in equity securities for the payment of the principal debt, which inured to the benefit of the creditors upon the principle of subrogation. The application of the principle of subrogation in favor of cred- itors and of sureties has undoubtedly been frequent in the courts of equity in England and the United States, and is an ancient and familiar head of their jurisdiction. CHAP. IV.] HAMPTON V. PHIPPS. 649 It was distinctly stated, as to creditors, in the early case of Maure v. Harrison, where the whole report is as follows: — "A bond creditor shall, in this court, have the benefit of all counter-bonds or collateral security given by the principal to the surety ; as if A owes B money, and he and C are bound for it, A gives C a mortgage or bond to indemnify him, B shall have the benefit of it to recover his debt." And the converse of the rule was stated by Sir William Grant, in Wright v. Morley, 1 where he said: — "I conceive that as the creditor is entitled to the benefit of all the securities the principal debtor has given to his surety, the surety has full as good an equity to the benefit of all the securities the prin- cipal gives to the creditor." And it applies equally between sureties, so that securities placed by the principal in the hands of one, to operate as an indemnity by payment of the debt, shall inure to the benefit of all. Many sufficient maxims of the law conspire to justify the rule. To avoid circuity and multiplicity of actions ; to prevent the exercise of one's right from interfering with the rights of others; to treat that as done which ought to be done; to require that the burden shall be borne by him for whose advantage it has been assumed ; and to secure equality among those equally obliged and benefited, are perhaps not all the familiar adages which may legitimately be assigned in support of it. It is, in fact, a natural and necessary equity which flows from the relation of the parties, and though not the result of contract, is nevertheless the execution of their intentions. For, when a debtor, who has given personal guaranties for the performance of his obliga- tion has further secured it by a pledge in the hands of his creditor, or an indemnity in those of his surety, it is conformable to the pre- sumed intent of all the parties to the arrangement, that the fund so appropriated shall be administered as a trust for all the purposes, which a payment of the debt will accomplish; and a court of equity accordingly will give to it this effect. All this, it is to be observed, as the rule verbally requires, presupposes that the fund specifically pledged and sought to be primarily applied, is the property of the debtor, primarily liable for the payment of the debt; and it is because it is so, that equity impresses upon it the trust, which requires that it shall be appropriated to the satisfaction of the creditor, the exon- eration of the surety, and the discharge of the debtor. The implica- tion is, that a pledge made expressly to one is in trust for another, because the relation between the parties is such that that construc- tion of the transaction best effectuates the express purpose for which it was made. It follows that the present case cannot be brought within either the terms or the reason of the rule; for, as the property, in respect to which the creditors assert a lien, was not the property of the princi- i 11 Ves. 12. 650 HAMPTON V. PHIPPS. [CHAP. IV, pal debtor, and has never been expressly pledged to payment of the debt, so no equitable construction can convert it by implication into a security for the creditor. It is urged that the logic of the rule would extend it so as to cover the case of all securities held by sureties for purposes of indemnity of whatsoever character and by whomsoever given. But this sugges- tion is founded on a misconception of the scope of the rule and the rational grounds on which it is established. Of course, if an ex- press trust is created, no matter by whom, nor of what, for the payment of the debt, equity will enforce it, according to its terms, for the benefit of the creditor, as a cestui que trust ; but the question concerns the creation of a trust, by operation of law, in favor of a creditor, in a case where there was no duty owing to him, and no intention of bounty. A stranger might well choose to bestow upon a surety a benefit and a preference, from considerations purely per- sonal, in order to make good to him exclusively any loss to which he might be subjected in consequence of his suretyship for another. In such a case neither co-surety nor creditor could, upon any ground of privity in interest, claim to share in the benefit of such a benevolence. 1 There may be, indeed, cases in which it would not be inequitable for the debtor himself to make specific pledges of his own property, limited to the personal indemnity of a single surety, without benefit of participation or subrogation; as, when the liability of the surety was contingent upon conditions not common to his co-sureties, and which may never become absolute. Hopewell v. Cumberland Bank. 2 We are referred by counsel to the case of Curtis v. Tyler, 3 as an instance in which the rule has been extended to securities in the hands of a surety not derived from the principal debtor. But the fact in that case is otherwise. The question was as to the right of an assignee of a mortgage to the benefit of the guaranty of one Allen to make good any deficiency in the mortgaged property to pay the mortgage debt. This bond had been given to one Murray, a prior holder of the mortgage, who had assigned it to the complainant. The Court say, in the opinion, p. 436: — "In the case under consideration Murray had assigned the bond and mortgage given to him, and had guaranteed the payment thereof to the assignee. He, therefore, stood in the situation of a surety for the mortgagor, when the latter procured the bond of Allen as a col- lateral security, or as a guaranty of the payment of his original bond and mortgage. The present holders are, therefore, in equity entitled to the benefit of this collateral bond, in the same manner and to the 1 Mechlin v. Northern Bank, 83 Ky. 314; Taylor v. Farmers' Bank, 87 Ky. 398- Black v. Kaiser, 91 Ky. 422 ; Union Bank v. Rich, 106 Mich. 319, 329 (semble), in which cases a creditor claimed the benefit of securities given to the surety by a stranger, Accord. — Ed. 2 10 Leigh, 206. s 9 Paige, 432. CHAP. IV.] HAMPTON 0. PHIPPS. 651 same extent as if it had been given to Murray before be assigned his bond and mortgage, and had been expressly assigned by him to Beers, and by Beers to the complainants." It thus distinctly appears that the bond of Allen, which was the collateral security in controversy, was procured by and derived from the original mortgagor, the principal debtor. We have been referred to no case which forms an exception to the rule as we have stated it. But the claim of the complainants fail3 for another reason. The right of subrogation, on which they rest it, is merely a right to be substituted in place of each of the co-sureties in respect to the other, in order to enforce the mortgages given by them respectively accord- ing to their terms. But the conditions of those mortgages have not been broken, and the very fact, which is supposed to confer the right upon the creditor to interpose — the insolvency of the sureties — has rendered it impossible for either to fasten upon the other a breach of the condition of his mortgage. As neither can pay his own pro- portion of the liability they agreed to divide, neither can claim in- demnity against the other for an over-payment. It is entirely clear, therefore, that neither of the sureties could be, under the circum- stances as they appear, entitled, as mortgagee, to foreclose the mort- gage against the other. The condition of each mortgage was, that the mortgagor would perform his part of the agreement and indem- nify the mortgagee against the consequences of a failure to do so. Unless one of them had been compelled to pay, and had in fact paid, an excess beyond his agreed share of the debt, there could have been no breach of the conditions of the mortgage, and consequently no right to a foreclosure and sale of the mortgaged premises. And the amount which the mortgagor could be required to pay, as a condition of redeeming the mortgaged premises, in case of foreclosure, would be, not the amount which the mortgagee, as between himself and the common creditor, was bound to pay on account of the debt, but the amount which, as between himself and his co-surety, the mort- gagor, he had paid beyond the proportion which, by the terms of the agreement between them, was the limit of his liability. The mort- gages were not created for the security of the principal debt, but as security for a debt possibly to arise from one surety to the other. As to which of them has there been as yet any default? Plainly none as to either. And yet the complainants assert the right to foreclose them both — a claim that is self-contradictory, for, by the very nature of the arrangement, it is impossible that there should be a default as to both. The fact that one mortgagor had failed to perform his part of the agreement could only be on the supposition that the other had not only fully performed it on his part, but had paid that excess against which his co-surety had agreed to indemnify him. There is, therefore, no right to the subrogation insisted on, because there i,° nothing to which it can apply. It results, therefore, that the complainants were not entitled to 652 HAMPTON V. PHIPPS. [CHAP. IV. participate in the benefit of the mortgages in question, nor to share in the proceeds of the sale of the mortgaged premises; but that the same should have been applied to the payment of the other judgment and mortgage liens upon the premises, in the order of their priority. The decree of May 29, 1879, therefore, being the one from which the appeal was taken, is reversed, and the cause remanded with direc- tions to take such further proceedings therein, not inconsistent with this opinion, as justice and equity require. Decree reversed. 1 1 Siward v. Huntington, 94 N. Y. 104, 26 Hun, 217, Accord.— Ed. / SV7, s~2l /, -6<(. &>p£L& • ?J3(?t~J r3C,- ^.T^ AA 000 604 316 '■'■ 'VY. •'■,