Morgan v. Martien

Bat, Judge, delivered the opinion of the court. The only question presented by the record in this case is whether the acceptance by plaintiff of the deed of trust so changed, altered or modified the original contract as to release the surety. The general rule of law as extracted from English authorities is, that any variation in the agreement to which the surety has subscribed, which is made without his knowledge or consent, and which may prejudice him, or which may amount to a substitution of a new agreement for a former agreement, will discharge the surety. The rule is fully recognized by American authorities, and is thus stated by Story, in his work on Contracts, vol. 1, p. 428 : “ The liability of a surety cannot be extended beyond the actual terms of his engagement. "Whenever, therefore, he fairly assumes a liability, it may be extinguished by any act or omission of the guarantee which alters the terms of the contract, unless it be with his consent. Nor does it matter that such an alteration be for the benefit of the guarantor ; because he has a right to stand upon the very terms of his agreement.” [444] Thus no principle is better settled than that if the creditor, without the consent of the surety, agree to give time to the principal debtor, the surety is thereby discharged; and the reason of this doctrine is obvious enough, for by giving time to the debtor, the remedy of the surety against the principal is postponed, and becomes more uncertain and precarious. The right of the surety, therefore, to stand upon the terms of the original agreement is clear and undoubted. Now, the question to be determined in this case is, whether the deed of trust changes or alters the original contract, or whether it is a new and additional security, and therefore collateral, and in no sense affecting the rights of the parties in reference to the original contract. The deed bears even date with the note sued on, but was not executed until some time in June following. It conveys to the trustees of plaintiff and one William T. Christy, a largo tract of land in Au-drain county, to secure the payment of certain notes therein mentioned, including the note in controversy, and it provides that if any one of the notes shall become due and remain unpaid for thirty days, then all of said notes shall become due and payable, and the trustees, or the survivor or survivors of them, may proceed to sell the property therein conveyed at public auction, &c., and out of the proceeds of such sale shall pay said notes or either of them, whether by their face they become due or not. There is no clause or covenant in the deed from which it can be inferred that the parties intended that it should operate as an extinguishment of the original contract, or should in anywise enlarge or diminish the liability of either party to such original contract. On the contrary, it is manifest that the deed was merely collateral, and intended as an additional and further security. So far from affecting the rights or remedies of the surety, it enures to his benefit. The object of the provision in the deed making certain notes mature upon the contingency expressed, was to enable the trustees to sell the property upon such con [445] tingency, and apply the proceeds, or so much thereof as might be necessary, to the liquidation of all the notes whether upon their face they had matured or not. It was to insure the prompt performance of the original contract, and not to change or alter it. It was to enable the trustees to apply the proceeds of the sale -to the payment of the entire debt instead of a part. The notes could not, by the happening of such contingency, mature for general purposes, and hence the plaintiff could not have brought suit upon this note prior to its maturity, as expressed on its face. We are therefore disposed to regard the deed as merely collateral and furnishing new and additional security for the performance of the contract; and the doctrine is well recognized, that the taking of such additional security without agreeing to give time to the debtor,' will not discharge the surety. (2 Story on Cont. 429; Pittman on Principal and Surety, 202-3; Emes v. Widdowson, 4 Car. & Payne, 151.) Emes v. Widdowson was an action of assumpsit on two bills of exchange. The defendant conveyed certain property as security for sums of money then due, and also for all future demands. The assignment contained a power of sale, but not to be executed until after six months’ notice. The notice had not been given, and the defence proceeded upon the ground that the personal remedy was suspended. Tindall, C. J., held, however, that the assignment could only be considered as collateral security, and that the personal remedy was not suspended, there being no clause in the deed to that effect. See also Gahr v. Niemcewicz, 11 Wendell, 322, and the authorities there cited. The reason of the rule above referred to certainly does not exist in this case. The defendant has been deprived of no remedy against the principal, and the taking of the deed was greatly to his advantage. He cannot, therefore, claim a release upon any legal or equitable ground. The judgment will be reversed and the cause remanded ; the other judges concurring.