Wilson v. Bank of Orleans

ORMOND, J. The defence set up in discharge of the judgment; is one which has frequently been presented in this court of late years, — that the surety has been discharged by the act of the creditor, giving time to the principal debtor, without his consent. To the success of this defence, it is necessary to establish, that a valid, binding contract hasbeen made between the creditor and the principal debtor, without the consent of the surety, by which the contract to which he was a party, has been altered ; as, where the time of payment is prolonged. This discharges the surety, because it not only increases his risk, and compels him to guarantee the ability of his principal for an additional period of time, but it also deprives him of the right of requiring the creditor to sue during the time so given for payment, and also of the privilege of paying the debt himself, and proceeding at once against his principal. The foundation of all this doctrine, which, as has been frequently observed, savors not a little of subtlety and refinement, is, that by the contract made without his consent, the risk of the surety has been, or may be increased. A contract, to discharge the surety, must be . oil sufficient consideration, for if the delay be actually given, if the prom [851] ise to delay was without consideration, the surety is not discharged. [Brickwood v. Annis, 5 Taunton, 614; Agee v. Steel, at the present term.] The law as above stated, is also applicable where the debt is reduced to. judgment, and the creditor precludes himself by a contract with the principal debtor, from proceeding to realize the fruits of his .judgment for a stipulated period. [Carpenter v. Devon, 6 Ala. 724.] With this brief statement of the law applicable to such cases, we proceed to the examination of the agreement in this case, relied on as a discharge of the surety. The principal debtor it appears was insolvent, and a judgment had been obtained against the complainant, the surety, execution levied on his property, and advertised for sale. In this state of things, the Bank agreed to stay proceedings upon the execution, and to receive payment from the principal debtor, by instalments of ten per cent, every sixty days, until the debt was paid. If by this arrangement, the Bank had released the property of the principal debtor from sale, there would be great reason in the argument urged, but this is clearly an indulgence to the surety, and not to the principal, and we are not aware that it has been held, that such a contract would relieve him from his obligation. Again, if this were not so, the 'agreement is without consideration. It was a favor granted at the importunity of the principal debtor, for which he says himself, in his deposition, there Was no consideration. It is now urged, that by the agreement, the money was to be paid in New Orleans, whilst in the ordinary course of things, the payment would be mad.e in Montgomery, which, it is supposed, would be a beneficial ■arrangement for the bank, as it would be saved the expense and trouble of transporting the money. It does not appear very clearly, that the contract was express to this point, or that there was any distinct understanding upon the subject. No writing was entered into by the parties, and it is very improbable, if this was the inducement to the change of the contract, that it was not expressly understood. The parties to the contract, when they came to execute it, did not so understand it, for we find, that the first, and only instalment [852] was paid, not in New Orleans, but in Montgomery, to the Bank there, as the agent of the Bank of Orleans, and it does' not appear that the latter objected to receiving it, on that account, but that in fact it was received. ' But if such was the agreement, we are unable to perceive how that would vary the case. Specie in Montgomery, has the same actual value, as it has in New Orleans; whether it would be worth more to the Bank in New Orleans, than it w'ould be at Montgomery, depends upon factitious circumstances. If the Bank wanted funds in Montgomery, or if from the course of trade, the exchange between these two places was in favor of Montgomery, it would clearly be the interest of the Bank to have it paid in Montgomery. How the fact is, we are unable to say, as the record furnishes no means for the solution of the question. Nor can it admit of doubt, from the entire record, that this matter did not enter into the consideration of the parties, when the indulgence was given. If it were necessary, it would not be difficult to show, that the surety was apprized of the arrangement, soon after it was made, and assented to it. Whitman says he informed him of the arrangement by letter, as soon as it was made ; and the letter of Whitman to him in July, affords internal evidence, that he had previously conversed with the surety about the arrangement, not to mention the admissions of the latter to the cashier of the Montgomery Bank. Nor would it require stringent proof to show the assent of the surety to “an arrangement which released his property from execution, and afforded a hope of the payment of the debt by his- principal. It is however unnecessary to consider this question, for on the other points of the case it is clear there is no equity in the -bill, and that the decree of the Chancellor must be affirmed,