Sailly v. Elmore

The Chancellor. It is now settled that the same principles, which in this court are sufficient to discharge the surety, may be plead by him as a defence to an action, on simple contract, in a court of law. But as this court had originally the exclusive jurisdiction in such cases it is no objection to a bill filed here, at this time, that the complainant has an adequate remedy or good defence at law. In the language of Lord Eldon: “ This court will not allow itself to be ousted of any part of its original jurisdiction because a court of law happens to fall in love with the same, or a similar jurisdiction.” (Eyre v. Everitt, 2 Russ. R. 382.) If a suit at law is commenced in such a case, and the defendant in that suit unnecessarily files a bill here to set up a defence of which he may now avail himself at law, this court may refuse to interfere by way of preliminary injunction, or it may not give him costs on a final decree. But if he establishes his equitable defence here, this court cannot dismiss the bill for want of jurisdiction. Where the creditor makes a valid and binding contract with the principal debtor to give him further time of payment, without the concurrence of the surety, it is a discharge of such surety. He will also be discharged by any arrangement or dealing between the principal debtor and the creditor, which operates as a fraud upon the surety. As if the [500] tltoiiey had been offered to the creditor at the day it fell ¿tie, or afterwards, and he had without the consent of the surety requested the debtor to retain it longer, this would operate as a fraud upon the surety and discharge his liability. But a mere consent to the delay of payment because the principal debtor had not the ability to pay presently, and without any new consideration, does not discharge the surety. (Heath v. Key, 1 Young & Jer. R. 434, McLemore v. Pewell, 12 Wheat, R. 554. If the complainant in this case had established the fact that Elmore had fraudulently colluded with M. & G. to conceal from him the fact of non-payment of the note, untij their circumstances became desperate, it would have discharged his liability. Such an arrangement would have thrown him off his guard, and thereby have prevented him from securing himself in due season. But here the complainant instituted no inquiry, and made no attempt to ascertain whether his liability was discharged or otherwise. Neither do I understand the answer as intending to admit that the defendant agreed to conceal from the surety the fact of non-payment. He promised only to delay proceedings against them, and not to call upon Sailly and thus indirectly to enforce the immediate payment of the demand through him. The creditor Was not bound to give the surety notice of the non-payment of the note. If there was an agreement to conceal from the complainant the fact that the note was still due and unpaid, the complainant should have filed a replication to the answer, and have established such fraudulent agreement by legal proof. The admissions in the answer do not go that length, and they afford no ground of equitable defence to the suit on the note. The complainant’s bill must therefore be dismissed, with costs.