Wilkerson v. Crescent Insurance

Riddick, J., (after stating the facts.) '■ The question presented for our consideration is thus stated by counsel for appellant: “Can the appellee recover from the surety, after having had knowledge of the principal's delinquencies for about- three years, during which time the appellee failed to advise the surety that his principal was in default?” The answer to this question must be in the affirmative,| for the failure of the insurance company to notify the surety of such default does not, in our opinion, discharge the surety. To discharge the surety the act of the creditor must be injurious to the legal rights of the surety. An agreement with the principal debtor extending time for payment or in any manner changing the contract will have that effect, but mere indulgence is not sufficient. Clark v. Sickler, 64 N. Y. 231; Grisard v. Hinson, 50 Ark. 229. The inaction of the creditor will not discharge the surety unless it amounts to fraud or concealment, for the surety is bound to inquire for himself, and cannot complain that the creditor does not notify him of the state of the accounts of his agent for which the surety is'liable. Watertown Ins. Co. v. Simmons, 131 Mass. 85; Atlantic & Pacific Telegraph Co. v. Barnes, 64 N. Y. 385. This very question was considered in the case of Watertown Ins. Co. v. Simmons, supra. It was there held, under circumstances very similar to those in this case, that the law imposed no duty upon the insurance company either to dismiss its agent or to notify the surety of his default. “It is,” said the court, “the business of the surety to see that his principal performs the duty which he has guarantied, and not that of the creditor.” In this case the amount for which the agent was in arrears was not large, and it seems reasonable to believe that the insurance company kept him in its employ with the expectation that eventually he would settle his accounts by paying the balance due. The company was not called on by the surety for information concerning the state of the agent's account, and there seems to,have been nothing done by the company that amounted to either fraud or concealment. We therefore conclude that the judgment of the circuit court was right, and it is affirmed.