Newell v. Hamer

Mr. Justice Trotter delivered the opinion of the court. It is a well settled principle, that if a creditor by an agreement [691] with the principal -debtor,, .enlarges the time of payment without the consent of the.surety, the latter;4s thereby discharged. 3 Merivaile’s Rep. 272; 10 J. R. 591; 2 Bro. Ch. Cases, 579; 17 J. R. 389; 2 Vesey, Jr., 540. Such power is denied to the creditor upon the clearest;-?reasons-.of .policy and .-justice It4s4n effect a violation of the terms of the contract by which the; surety became bound, and is certainly a breach of good faith. A mere voluntary indulgence to, the debtor, however, is not within the.policy of this rule, and abridges none of the rights of the creditor. There must be a positive and binding agreement; and for this purpose it must be based upon some new. and valuable.consideration, which is sufficient to tie up the., creditor, and prevent him from asserting any,remedy during the time. for; which the indulgence has been given.. This is settled in nearly all the cases which have j ust been referred to;-and has been so decided in every case when the question has been-directly presented for the consideration of the court. This interferes with none of the rights of the surety, and cannot prevent him from a resort to any prescribed remedy. He may arrest the indulgence so given by a demand upon the creditor to-sue, after which it can-be continued only at the risk of the creditor. Thus in the case of McKenny’s Executors v. Walter, 1 Leigh, 436, it was proven that Walter, the principal debtor, had, at the time the execution in that case was issued, property in his possession amply sufficient to satisfy the whole amount of the debt. -That the sheriff was about to levy- on it, when the creditor at the earnest solicitation of the principal debtor, consented to give indulgence, which was done without the knowledge or consent of the surety. The sheriff was instructed not to levy the execution until the plaintiffs should see him. The execution was accordingly returned, “not executed, by order-of the plaintiffs.” The debtor subsequently removed the greater part of his property. The officer in consequence of this was unable to make the amount of the execution out of the property of the principal, and for the residue levied the process on the property of the surety. On this state of facts he sought to be relieved in equity, and filed his bill for an injunction, but the court without hesitancy refused his application. In the case of Alcock v. Hill, 4th Leigh, 626, the execution which was against the principal and sureties in a forthcoming bond [692] was suspended by the directions of the plaintiff, “until further orders,” The surety insisted that he was discharged, because he had not consented to the indulgence. But the court held that he was not. It is there said, that to constitute an agreement for extending the time of payment, which shall be sufficient to discharge the surety, four things are necessary. ' 1st. A consideration, for without it a promise to indulge is not binding. 2d. A promise to indulge. 3d. That the promise should not be altogether indefinite, for an indefinite promise is nugatory. And 4th. That the surety has not assented. The principle of these cases is fully recognised in all the authorities, and is decisive of the case at bar. The agreement was of no benefit to the debtor, since the creditor could arrest the indulgence at any hour, it being entirely indefinite as to time. The surety was not therefore prejudiced, because the plaintiffs had reserved the power to press the collection of the debt whenever the surety might request them to do so, or their interests might demand it. It is not necessary to consider whether the agreement in this case was founded on a good consideration, as it is manifest that the promise was nugatory, as the order was liable to be revoked at any moment. But we do not think there was any, binding consideration. If the cotton had been actually delivered to the plaintiffs, it would be different, as it was a mere promise to deliver in future, however, we think it was as much as if the debtor had promised the money due on the execution at some future time. It is not like the case of a partial payment in consideration of forbearance for the residue. Neither of the parties to this agreement could support an action upon it. The promise of indulgence was of no benefit to Newell, because it was indefinite, and open to a revocation by Hamer & Co. at any moment. The promise to deliver the cotton contained in this written agreement was therefore not binding on Newell, because it was without consideration. This being the case, it is unnecessary to notice the other ground assumed in the argument by the counsel for the appellants. Which is, that though the agreement in this case is not sufficient to bring it within the general rule by which the surety is discharged, yet it is in fact such a positive act of interference by the creditor as amounts to a fraud upon his rights. We do not think so. This is clearly no more than the case of a voluntary exten [693] sion of time to the debtor, granted, as it appears, with the hope and in the expectation that the debt would be paid as promised, by a delivery of cotton, which would supercede the necessity of exposing the property of Newell to the hazard of a sacrifice by a sale under the hammer of the sheriff. This was no fraud upon, or violation of any of the rights of the surety, since the terms of the indulgence left him at liberty to stop it whenever he saw proper. If these views be correct, it was surely quite unnecessary in the court below to hear proof as to the solvency of Newell at the date of the instructions to suspend the execution. Tljp application of Pierce was not to be decided by that criterion. His exemption from liability on his contract depended on the nature of the agreement, and its tendency to prejudice his rights. In the language of the court, in the case of Sailly v. Elmore, 2 Paige’s Ch. Rep. 499, “there must be some arrangement or dealing between the principal debtor and creditor which operates as a fraud upon the surety.” A mere consent to delay payment cannot be so considered. We are hence of opinion, that upon principle, as well as authority, there is no ground for the relief which has been applied for by the surety in this case. It may be proper to notice an objection which has been taken by the counsel for the appellees to the relief asked for, before closing this opinion. It is said that the motion to quash the execution could not be sustained, whatever title to relief Pierce may have. For the execution is an entire thing, and cannot be set aside as to one defendant and remain good as to the other. It is undoubtedly correct to say, that on a judgment against two, the execution must be against both, for it must follow the judgment. We are accordingly of opinion, that the surety should have resorted to some other mode to obtain the relief which he claimed. It has been urged that Pierce ceased to stand in the relation of a surety, after the judgment on the bond, but we are not of that opinion. The cases which have been already cited from 1st Leigh, 436, and 4th do. 626, as well as the case of Reid v. Watts, 4th J. J. Marshall, 440, were precisely like the present, and the relation of surety was held to continue. Let the judgment be affirmed.