CHAPTER On a joint and several note. WHAT CON When of a joint and several note one maker is in reality principal and the other surety, yet it is no defence at law that one is principal and the other is surety, that this was known to the creditor at the time of the contract, and, consequently, that the surety is discharged by time given to the principal (o). But such a defence is plainly available. in equity (p), and therefore may be the ground of an equitable plea. Secondly. As to what conduct of the creditor will disDUCT OF THE charge the surety. CREDITOR DOES OR DOES The creditor must not, as we have already seen, conceal from the surety any stipulation in the original contract, disCHARGE THE advantageous to the principal debtor. Such concealment is a fraud, and releases the surety (q). SURETY. (0) Price v. Edmunds, 10 B. & C. 578; Perfect v. Murgrave, 6 Price, 111; Manley v. Boycott, 2 E. & B. 46; Strong v. Foster, 17 C. B. 201; Hollier v. Eyre, 9 Clark & F. 45. But evidence to that effect has been admitted. Garrett v. Jull, 1 S. N. P. 11th ed. 407; Hall v. Willcox, 1 M. & Rob. 58. In Clarke v. Wilson, 3 M. & W. 208, it was intended to have raised the question, but on demurrer to defendant's plea judgment was given for the plaintiff. In Rees v. Berrington, 2 Ves. jun. 540, Lord Loughborough says, referring to legal obligations, "that where two are bound jointly and severally, the surety cannot aver by pleading that he is bound as surety." See Ashbee v. Pidduck, 1 M. & W. 564, and Thompson v. Clubley, 1 M. & W. 212. But in equity, a surety may aver and prove that he was only a surety, though the bond was joint and several. Heath v. Key, 1 Y. & J. 434; Nisbett v. Smith, 2 Bro. C. C. 581; Skip v. Hucy, 3 Atk. 91. The authorities are contradictory; but, on principle, such evidence is inadmissible at law as against the creditor; for it is parol evidence to make a written contract conditional, which, on the face of it, is absolute. The evidence does not show absence of consideration as in the case of an accommodation acceptance. Besides, the introduction of such evidence might affect an innocent indorsee with stipulations of which he had no notice. But when the question arises not between the creditor and his debtors, but between those debtors themselves, whether one was principal and the other was surety, parol evidence is admissible at law, as in such a case it clearly is in equity. Craythorne v. Swinburne, 14 Ves. 170; see p. 8; Reynolds v. Wheeler, 30 L. J., C. P. 350. (p) Hollier v. Eyre, 9 C. & F. 45; Davies v. Stainbank, 6 De G. Mac. & G. 679. See, however, Strong v. Foster, supra. But this case was reflected on in Pooley v. Harradine, 7 E. & B. 431; and see *Mutual Loan Fund v. Sudlow, 28 L. J., C. P. 108; Rayner v. Fussey, 28 L. J., Exch. 132; Taylor v. Burgess, 29 L. J., Exch. 7; 5 H. & N. 1, S. C.; and may be considered to have been finally overruled by the Court of Exchequer Chamber in Greenough v. M'Clelland, 30 L. J., Q. B. 15. (q) Pidcock v. Bishop, 3 B. & C. 605; 5 D. & R. 505, S. C.; Mayhew v. Crickett, 2 Swan. 193; Stone v. Compton, 5 Bing. N. C. 142; 6 Scott, 816, S. C.; Jackson v. Duchaire, 3 T. R. 551; Cecil v. Plaistow, 1 Anst. 202; Middleton v. Lord Onslox, 1 P. Wms. And the surety is discharged if the actual original contract between the creditor and the principal debtor varies in the slightest degree from that for which the surety had stipulated (r). So, in all transactions subsequent to the original contract, the surety's remedies, both at law and in equity, against the principal debtor, whether in his own name or in the name of the creditor, must be preserved intact by the creditor (s). The holder of a bill of exchange is not obliged to use active diligence in order to recover against the acceptor (t), in the absence of any agreement to do so. He may defer suing him as long as he pleases; he may even promise not to press him, or not to sue him, if the promise be not binding in law. Thus, where the executrix of an acceptor verbally promised to pay the holder out of her own estate, provided he would forbear to sue, and he forbore accordingly, it was held that, the agreement being invalid under the Statute of Frauds, the drawer was not discharged (u). But, if the holder once destroy or suspend, or, by a binding agreement with the acceptor (v), contract to destroy or suspend, his right of action against the acceptor, the drawer and indorsers are at once discharged, unless the agreement giving time contain a stipulation that the holder shall, in case of default, have judgment at a period as early as he could have obtained judgment if hostile proceedings had continued (x). But if the agreement contain a stipulation that a judgment shall be given, it is not necessary to aver in a plea disclosing such an agreement that the time within which the plaintiff might have obtained judgment was postponed (y). That it was not must either be specially replied, or may possibly (if the form of the averment in the plea 768; Brown v. Wilkinson, 13 M. & W. 14. (r) See Bonsor v. Cox, 4 Beav. 379; affirmed on appeal, 4 Beav. 383; 6 Beav. 110-118. 717; 1 M. & P. 754; 3 C. & P. (v) Fraser v. Jordan, 26 L. J., N. S., Q. B. 288; 8 E. & B. 303, S. C. But an agreement with a stranger will not have this effect. Ibid. See, however, Lyon v. Holt, worth, 5 H. & N. 235; affirmed on 5 M. & W. 250. (8) And see as to the duty of the creditor, Watts v. Shuttle appeal, 1861. Wolferay.lk: (x) Kennard v. Knott, 4 M. & (t) Orme v. Young, Holt, N. P.12r. 474; Michael v. Myers, 6 M. 84; Eyre v. Everest, 2 Russ. 381dvance is not necessarily a giving & Gr. 702. Receipt of interest in 3 Mer. 278; Trent Navigation v. Harley, 10 East, 34; unless there be a stipulation that the creditor is on default to sue the debtor without delay. Bank of Ireland v. Beresford, 6 Dow, 233. (u) Philpot v. Briant, 4 Bing. of time. Rayner v. Fussey, 28 (y) Kennard v. Knott, 4 M. & CHAPTER admits of it) be proved under a traverse of an actual for- If the creditor engages with the surety that he will Payment by the principal of course discharges the surety. The acceptor of a bill, or maker of a note, is bound to pay On the day the bill or note falls due, and therefore he cannot plead in his own discharge a subsequent tender (b). But it has been held that an indorser has a reasonable time within which to pay the bill; and if he pay, or tender payment, within a reasonable time, and before writ issued, perhaps he discharges himself (c). And, therefore, payment by the acceptor or maker, though after the note has been dishonoured, if within a reasonable time, and with interest, and before action brought against the indorser, or a tender of such payment, though it would not discharge himself, would, it should seem, discharge the indorser. A release to the acceptor or maker discharges the indorsers; and a release of one of several joint acceptors or makers is a release of all. But if it appear on the face of the deed that it was the paramount intention of the parties that the others should be held liable, this intention will be carried into effect by disregarding the form of the deed and construing the release as a covenant not to sue (d). But a general covenant not to sue discharges the sureties, for that will enure as a release (e); or a covenant not to sue within a particular time (ƒ), though it do not in law amount to a release, or suspend the action (g). (2) In some of the American (a) Lawrence v. Walmsley, 31 (b) Hume v. Peploe, 8 East, 168. (c) Walker v. Barnes, 5 Taunt. 240; 1 Marsh. 36, S. C.; Soward v. Palmer, 2 Mood. 274; 8 Taunt. 277; but see Siggers v. Lewis, 1 C., M. & R. 370; 4 Tyr. 847; 2 Dowl. 681, S. C. (d) Solly v. Forbes, 2 Bro. & * See ance 238 Bing. 38; Henderson v. Stobart, 5 B. 760. Bateson v Gosling 1.M. 7.CP.9 f) At law, a parol agreement by the creditor not to sue the prin-4/8.5.0.2. cipal is no discharge to the surety 53 of a liability he has contracted by deed. Davey v. Prendergrass, 5 B. & Al. 187, recognized in Price v. Edmunds, 10 B. & C. 582; Bulteel v. Jarrold, 8 Price, 467; Cocks v. Nash, 9 Bing. 346; 2 M. & Sc. 434, S. C.; sed vide Archer v. Hale, 4 Bing. 464; 1 M. & P. 285, S. C.; but, in equity, the creditor's giving time to the prin X So also will a release in law. Therefore, if the holder makes the acceptor his executor, the indorsers are discharged. CHAPTER Release in law. A written or verbal agreement, on good consideration (h), Agreement not to not to sue the acceptor at all, or not to sue him within a sue. specified time, discharges the drawer and indorsers(i); but if such agreement be without consideration, or otherwise void in law, the indorsers are not discharged (j). So in equedy The taking of a new bill from the acceptor, payable at a Renewing a bill, future day, discharges the indorsers (k). execution. Misappropriating or misusing, or losing any security for Misappropriation the debt held by the creditor, discharges the surety (1). of securities. New paragraph her Bercheraine valcons Discharging the acceptor or a prior indorser from exe- Discharging from cution against the person, discharges the other indorsers ; but discharging a subsequent indorser from execution affords no defence to a prior indorser (m). A second execution against the person of the same debtor who has been once discharged is not absolutely void, and therefore a man may be taken again if he has so agreed (n). cipal, although by a parol agreement, is a discharge to the surety of a liability created by deed. Rees v. Berrington, 2 Ves. jun. 540; Bulteel v. Jarrold, 8 Price, 467; et vide Combe v. Woolf, 8 Bing. 161; 1 M. & Sc. 241, S. C.; Bowmaker v. Moore, 3 Price, 214; 7 Price, 228; Blake v. White, 1 Y. & C. Exch. Ca. 420. As to circumstances under which a Court of Equity will interfere, see Heath v. Key, 1 Y. & J. 434. But a covenant not to sue upon a simple contract for a limited time, is not pleadable in bar to an action on the contract against the principal debtor. Thimbleby v. Barron, 3 M. & W. 210. (g) Quære, as to the effect of indulgence as to part of the sum due. See Mayhew v. Crickett, 2 Swanst. 189. (h) The Court will not estimate the value of the consideration. That would be to inquire whether the bargain were a good one or not. Moss v. Hall, 5 Exch. 50. (i) Ibid. (j) Arundel Bank v. Goble, K. B. 1817; Chitty, 9th ed. 413; 2 Chit. 335, S. C.; Willison v. Whitaker, 2 Marsh. 383; 7 Taunt. 53, S. C.; Brickwood v. Annis, 5 Taunt. 614; 1 Marsh. 250, S. C.; Philpot v. Briant, 4 Bing. 717; 1 Moo. & P. 754; 3 C. & P. 244, S. C. See the American authorities in Byles on Bills, 5th American ed. p. 385. (k) Gould v. Robson, 8 East, 576; English v. Darley, 2 B. & P. 62; 3 Esp. 49, S. C. (1) Pearl v. Deacon, 24 Beav. 186; 1 De G. & J. 461; 26 L. J., Ch. 761, S. C. (m) Hayling v. Mulhall, 2 Bla. 1235. In the marginal note of this case, the words "prior" and "subsequent are transposed. See English v. Darley, 2 B. & P. 62; 3 Esp. 49, S. C. (n) Atkinson v. Bayntun, 1 Bing. N. C. 444; 1 Scott, 404, S. C. CHAPTER Part-payment. Offer to give time. Cognovit, warrant of attorney, or judge's order. And it is conceived that where the holder of a bill has seized the acceptor's goods in execution, he is in the position of a creditor holding the security of a principal debtor, and may so conduct himself as to discharge the sureties (o). Part-payment by the principal or by the surety will only discharge the surety (p), pro tanto. A mere offer to give time to the acceptor not acted upon will not discharge the drawer (q). The taking a cognovit or warrant of attorney or judge's order from the acceptor, though payable by instalments, will not discharge the indorsers, provided the last instalment be not postponed beyond the period when, in the ordinary course of the action, judgment and execution might have been had (r). But the instrument must be executed with the statutory formalities (s). 66 (o) "It is," says Lord Eldon, a question fit to be tried at law, whether, if a party takes out execution on a bill of exchange, and afterwards waives that execution, he has not discharged those who were sureties for the due payment of the bill. The principle is, that he is a trustee of his execution for all parties interested in the bill." Mayhew v. Crickett, 2 Swanst. 190, and see Smith v. Winter, 4 M. & W. 467; Lake v. Brutton, 25 L. J., Ch. 842. But it has been decided, that the withdrawing of an execution against the goods of an acceptor will not discharge the drawer, against whom judgment had been obtained, and that the rule, that giving indulgence to an acceptor without the consent of the drawer discharges such drawer, does not apply after judgment. Pole v. Ford, 2 Chit. 126; Bray v. Manson, M. & W. 668; but see English v. Darley, 2 B. & P. 62; 3 Esp. 49, S. C. It is conceived that when the obligation of a surety is pursued to judgment, he is, at law, no longer surety, but an absolute debtor, yet that equity, regarding the substance and not the form of his obligation, may consider him still a surety, entitled to all the securities which the creditor holds, and perhaps discharged by indulgence to the principal. Vide Bray v. Manson, ubi supra. But a decree in equity against the surety prevents the subsequent giving of time from discharging the surety. Jenkins v. Robertson, 23 L. J., Ch. 816; 2 Drew. 351, S. C. (p)_Walwyn v. St. Quentin, 1 B. & P. 652; 2 Esp. 515, S. C. (q) Hewet v. Goodrick, 2 C. & P. 468; Badnall v. Samuel, 3 Price, 521. (r) Jay v. Warren, 1 C. & P. 532; and see Lee v. Lery, 6 Dowl. & R. 475; 4 B. & C. 390; 1 C. & P. 553, S. C.; Hulme v. Coles, 2 Simon, 12; Stevenson v. Roche, 9 B. & C. 707; Price v. Edmunds, 10 B. & C. 578; Kennard v. Knott, 4 M. & G. 474; Whitfield v. Hodges, 1 M. & W. 679. (s) Watson v. Alcock, 1 Sm. & G. 319; 4 De Gex, M. & G. 242. |