CHAPTER giving time contain a stipulation that the holder shall, in XX. case of default, have judgment at a period as early as he could have obtained judgment if hostile proceedings had continued (x). But if the agreement contain a stipulation that a judgment shall be given, it is not necessary to aver in a plea disclosing such an agreement that the time within which the plaintiff might have obtained judgment was postponed (y). That it was not must either be specially replied, or may possibly (if the form of the averment in the plea admits of it) be proved under a traverse of an actual forbearance (2). Receipt of payment. Release. If the creditor engages with the surety that he will enforce payment from the principal debtor within a certain time, his neglect to do so is a good defence in equity (a). Payment by the principal of course discharges the surety. Payment of money, which has to be refunded as being a fraudulent preference, is no payment so as to discharge a surety (b). The acceptor of a bill, or maker of a note, is bound to pay on the day the bill or note falls due, and therefore he cannot plead in his own discharge a subsequent tender (c). But it has been held that an indorser has a reasonable time within which to pay the bill; and if he pay, or tender payment, within a reasonable time, and before writ issued, perhaps he discharges himself (d). And, therefore, payment by the acceptor or maker, though after the note has been dishonoured, if within a reasonable time, and with interest, and before action brought against the indorser, or a tender of such payment, though it would not discharge himself, would, it should seem, discharge the indorser. A release to the acceptor or maker discharges the indorsers; and a release of one of several joint acceptors or (x) Kennard v. Knott, 4 M. & (y) Kennard v. Knott, 4 M. & (z) In some of the American (a) Lawrence v. Walmsley, 31 L. J., C. P. 143; Watson v. Alcock, 22 L. J., Chan. 858; 4 De G., Mac. & G. 242. (b) Pritchard v. Hitchcock, 6 M. & G. 151; Petty v. Cooke, L. R., 6 Q. B. 790. (c) Hume v. Peploe, 8 East, 168. (d) Walker v. Barnes, 5 Taunt. 240; 1 Marsh. 36; Soward v. Palmer, 2 Mood. 274; 8 Taunt. 277; but see Siggers v. Lewis, 1 C., M. & R. 370; 4 Tyr. 847; 2 Dowl. 681. XX. makers is a release of all. But if it appear on the face of CHAPTER the deed that it was the paramount intention of the parties that the others should be held liable, this intention will be carried into effect by disregarding the form of the deed and construing the release as a covenant not to sue (e). But a general covenant not to sue discharges the sureties, Covenant not for that will enure as a release (ƒ); or a covenant not to to sue. sue within a particular time (g), though it do not in law amount to a release, or suspend the action (h). So also will a release in law. Therefore, if the holder Release in made the acceptor his executor, the indorsers were dis- law. charged at law, though it might be otherwise in equity. not to sue. A written or verbal agreement, on good consideration (i), Agreement not to sue the acceptor at all, or not to sue him within a specified time, discharges the drawer and indorsers (j); but if such agreement be without consideration, or not made with the principal or otherwise void, the indorsers are not discharged (k). Giving time to an apparent surety, who is really the principal, will discharge the acceptor, who though (e) Solly v. Forbes, 2 Bro. & Bing. 38; Henderson v. Stobart, 5 Exch. 99; Price v. Barker, 4 E. & B. 760; Bateson v. Gosling, L. R., 7 C. P. 9; 41 L. J., C. P. 53. (f) Com. Dig. Release. (g) At law, a parol agreement by the creditor not to sue the principal is no discharge to the surety of a liability he has contracted by deed. Davey v. Prendergrass, 5 B. & Al. 187, recognized in Price v. Edmunds, 10 B. & C. 582; Bulteel v. Jarrold, 8 Price, 467; Cocks v. Nash, 9 Bing. 346; 2 M. & Sc. 434; sed vide Archer v. Hale, 4 Bing. 464; 1 M. & P. 285. But, in equity, the creditor's giving time to the principal, although by a parol agreement, is a discharge to the surety of a liability created by deed. Rees v. Berrington, 2 Ves. jun. 540; Bulteel v. Jarrold, 8 Price, 467; et vide Combe v. Woolf, 8 Bing. 161; 1 M. & Sc. 241; Bowmaker v. Moore, 3 Price, 214; 7 Price, 228; Blake v. White, 1 Y. & C. Exch. Ca. 420. As to circumstances under which a Court of equity would (h) Quære, as to the effect of (i) The Court will not estimate (k) Arundel Bank v. Goble, K. CHAPTER apparently the principal is only the surety to the knowledge of the creditor (1). XX. Renewing a bill. The taking of a new bill from the acceptor, payable at a future day, discharges the indorsers (m). Misappropria- Misappropriating or misusing, or losing any security for tion of securi- the debt held by the creditor, discharges the surety (n). ties. Inability to recover. Discharging from execution. Where the creditor was unable to recover against the principal debtor on account of a set-off existing between them, an equitable plea stating these facts was held to be a good defence in an action against the surety (o). Discharging the acceptor or a prior indorser from execution against the person, discharges the other indorsers; but discharging a subsequent indorser from execution affords no defence to a prior indorser (p). A second execution against the person of the same debtor who has been once discharged is not absolutely void, and therefore a man may be taken again if he has so agreed (q). And it is conceived that where the holder of a bill has seized the acceptor's goods in execution, he is in the position of a creditor holding the security of a principal debtor, and may so conduct himself as to discharge the sureties (r). (1) Oriental Finance Co. V. Overend, Gurney & Co., L. R., 7 Chan. Ap. 142; L. R., 7 H. of L. 348. (m) Gould v. Robson, 8 East, 576; English v. Darley, 2 B. & P. 62; 3 Esp. 49. (n) Pearl v. Deacon, 24 Beav. 186; 1 De G. & J. 461; 26 L. J., Ch. 761; Wulff v. Jay, L. R., 7 Q. B. 756; 41 L. J. 322. (0) Bechervaise v. Lewis, L. R. 7 C. P. 372; 41 L. J. 161. (p) Hayling v. Mulhall, 2 Bla. 1235. In the marginal note of this case, the words "prior" and "subsequent are transposed. See English v. Darley, 2 B. & P. 62; 3 Esp. 49. (q) Atkinson V. Bayntun, 1 Bing. N. C. 444; 1 Scott, 404. (r) "It is," says Lord Eldon, a question fit to be tried at law, whether, if a party takes out execution on a bill of exchange, and afterwards waives that execution, he has not discharged those who were sureties for the due payment of the bill. The principle is, that he is a trustee of his execution for all parties interested in the bill." Mayhew v. Crickett, 2 Swanst. 190, and see Smith v. Winter, 4 M. & W. 467; Lake v. Brutton, 25 L. J., Ch. 842. But it has been decided that the withdrawing of an execution against the goods of an acceptor will not discharge the drawer, against whom judgment had been obtained, and that the rule, that giving indulgence to an acceptor without the consent of the drawer discharges such drawer, does not apply after judgment. Pole v. Ford, 2 Chit. 126; Bray v. Manson, 8 M. & W. 668; but see English v. Darley, 2 B. & P. 62; 3 Esp. 49. It is conceived that when the obligation of a surety is pursued to judgment, he is, at law, no longer surety, but an absolute debtor, yet that equity, Part payment by the principal or by the surety will only CHAPTER discharge the surety (s) pro tanto. XX. Part payment A mere offer to give time to the acceptor not acted upon Offer to give will not discharge the drawer (t). time. warrant of The taking a cognovit or warrant of attorney or judge's Cognovit, order from the acceptor, though payable by instalments, attorney, or will not discharge the indorsers, provided the last instalment judge's order. be not postponed beyond the period when, in the ordinary course of the action, judgment and execution might have been had (u). But the instrument must be executed with the statutory formalities (v). The obtaining of a judgment against any one party, Judgment. without satisfaction, is no discharge of any party (w). any other If the acceptor become bankrupt, the holder may prove Bankruptcy. and receive a dividend without prejudice to his remedies against other parties, for the acceptor is, in case of bankruptcy, discharged, not by the act of the holder, but by act of law (x). and compounding. It is now decided, on both sides of Westminster Hall, Liquidation that whether a debtor be released by bankruptcy, liquidation, or involuntary composition, he is discharged by operation of law, and his co-debtor or surety still remains regarding the substance and not the form of his obligation, may consider him still a surety, entitled to all the securities which the creditor holds, and perhaps discharged by indulgence to the principal. Duncan, Fox & Co. v. N. S. Wales Bank, 6 App. Ca. 1. But a decree in equity against the surety prevents the subsequent giving of time from discharging the surety. Jenkins v. Robertson, 23 L. J., Ch. 816; 2 Drew. 351. (s) Walwyn v. St. Quentin, 1 B. & P. 652; 2 Esp. 515. (t) Hewet v. Goodrick, 2 C. & P. 468; Badnall v. Samuel, 3 Price, 521. (u) Jay v. Warren, 1 C. & P 532; and see Lee v. Levy, 6 Dowl. & R. 475; 4 B. & C. 390; 1 C. & P. 553; Hulme v. Coles, 2 Simon, 12; Stevenson v. Roche, 9 B. & C. 707; Price v. Edmunds, 10 B. & C. 578; Kennard v. Knott, 4 M. & G. 474; Whitfield v. Hodges, 1 M. & W. 679. (v) Watson v. Alcock, 1 Sm. & G. 319; 4 De Gex, M. & G. 242. (w) Claxton v. Swift, 2 Show. 441, 494; 1 Lutw. 878; Ord. XIII. r. 4. (x) Brown v. Carr, 5 Russ. 600; 7 Bing. 508; Langdale v. Parry, 2 D. & R. 337. CHAPTER liable (y), and the law was the same under the old insolvent acts (2). XX. Collateral security. Though the taking of a fresh bill from the acceptor in lieu of the dishonoured bill discharges the other parties, it will not have the effect, if the second bill or second security, whatever it be, were given as a collateral security (a). Where a bill having been dishonoured, the acceptor transmitted a new bill for a larger amount to the payee, but had not any communication with him respecting the first, and the payee discounted the second bill and indorsed the first to the plaintiff; it was held, that the second bill was merely a collateral security, and that the receipt of it by the payee did not amount to giving time to the acceptor of the first bill, so as to exonerate the drawer. "In cases of this description," says Abbott, C.J., "the rule laid down is, that if time be given to the acceptor, the other parties to the bill are discharged; but in no case has it been said, that taking a collateral security from the acceptor shall have that effect. Here the second bill was nothing more than a collateral security" (b). B., being indebted to A., procured C. to join with him in giving a joint and several promissory note for the amount, and afterwards having become further indebted and being pressed by A. for further security by deed reciting the debt, and that for a part a note had been given by him and C., and that A. having demanded payment for the debt, B. had requested (y) Megrath v. Gray, L. R., 9 Ex (z) Nadin v. Battie, 5 East, 147; 1 Smith, 362; and see English v. Darley, 2 B. & P. 62; 3 Esp. 49. If a creditor executed a deed of composition, having indorsed away bills on the debtor, the deed was no defence to an action on the bills when they were returned to the creditor. Margetson v. Aitken, 3 C. & P. 383; Dans. & Ll. 157. Where a man has been discharged from a debt on a note under the Insolvent Act, a new note for the old debt would not bind, though given to procure time for a surety on the old note. Evans v. Williams, 1 C. & M. 30; 3 Tyr. 226. (a) Gordon v. Calvert, 4 Russ. 581; Calvert v. Gordon, 7 B. & C. 809. (b) Pring v. Clarkson, 1 B. & C. 14; 2 Dowl. & R. 78. See the observations on this case. Bayley, 6th ed. 347. |