CHAPTER HOW THE DIS- PREVENTED. HOW IT MAY Thirdly, as to the means by which the discharge of the principal may be prevented from operating as a discharge of the surety. It has been repeatedly held, and is now well established, that a giving of time by the creditor to the principal debtor will not discharge the surety, if there be an agreement between the creditor and the principal, that the surety shall not be thereby discharged (n), although the surety himself be no party to the stipulation, or even have no notice of it (0). And the surety's remedy over against the principal is intact, whether the surety be or be not a party (p), unless the instrument amount to a release, or to a release of one of several joint or joint and several debtors (q). This stipulation, reserving the rights of the surety, must in general appear on the face of the instrument giving time, and cannot, if the indulgence be in writing, be proved by parol (r). But that is not always necessary where the agreement to reserve the sureties' rights is distinct and collateral (s). No indulgence to an acceptor or other prior party will discharge an indorser, if the indorser previously consent to it. Thus, where the acceptor, having been arrested by the holder, offered him a warrant of attorney for the amount of the bill payable by instalments, and, the holder mentioning the offer to the drawer, the drawer said, "You may do as you like, for I have had no notice of the non-payment;" it was held that this amounted to an assent, and that the drawer (who, in fact, had had notice) was not discharged by the indulgence (1). Fourthly, as to the mode in which the operation of indulgence to the principal on the liability of the surety may be waived. (n) Burke's case, 6 Ves. 809; Boultbee v. Stubbs, 18 Ves. 20; 11 R. R. 141; Er parte Glendinning, Buck. 517; Er parte Carstairs, ibid. 560; Harrison v. Courtauld, 3 B. & Ad. 36; Nichols v. Norris, ibid. 41, n.; Cowper v. Smith, 4 M. & W. 519; Smith v. Winter, ibid. 454; North v. Wakefield, 13 Q. B. 258; Owen v. Homan, 4 H. L. Cases, 997. (0) Webb v. Hewitt, 3 K. & J. 438. (p) Kearsley v. Cole, 16 M. & W. 128; Webb v. Hewitt, 3 K. & J. 438. () Ibid. It is not unusual to insert in the original contract of suretyship a stipulation, that a composition with the principal shall not release the surety. See Cowper v. Smith, 4 M. & W. 519. () Ubi supra. (*) Er parte Harvey, 23 L. J., Bank. 26; Wyke v. Rogers, 21 L. J., Ch. 611; 1 De G., M. & G. 408. But see Ex parte Glendinning, Buck. 517, where time is given by deed. (f) Clark v. Derlin, 3 B. & P. 363; 7 R. R. 793, ΧΧ. Wherever the surety, with knowledge of the facts, assents CHAPTER either by words or acts to what has already been done, such subsequent assent will be a waiver of his discharge without any new consideration (u). Therefore, where time had been given, and the drawer, aware of the fact, but ignorant of the law, and conceiving himself still liable, said, "I know I am liable, and if the acceptor does not pay it I will," the drawer was held to have waived his discharge (). But where a bill was renewed, and an indorser said, "It was the best thing that could be done," it was held that this was no recognition of his liability (y). Fifthly, as to discharge of principal by dealings with surety. If the principal and sureties are jointly liable, e.g., if they are joint makers of a note, then a discharge to a surety by the creditor releasing him, or making him executor, or taking from him a composition, and erasing his name from the note, will be a discharge of the co-surety, and also of the principal debtor (2); but the discharge, in this case, does not proceed on the law of principal and surety. Lastly, as to the rights of sureties. WHAT CON- HOLDER THE SURETY PRINCIPAL. A drawer who has been compelled to pay the bill may RIGHTS OF recover from the acceptor, and an indorser who has been SURETIES. compelled to pay the bill or note may recover from the acceptor or maker, the drawer, or a prior indorser, the amount of the bill with interest (a). He may also avail himself of the third party procedure, and cause his principal or principals to be made parties to the action upon such terms as to costs as the Court may decide (b). If one who is surety on a joint and several note, signed by Surety's right the principal, pay the amount, though without any request to indemnity. or compulsion by the creditor, he may recover it of the principal (c). A surety, on payment of the debt, was entitled (u) Mayhew v. Crickett, 2 Swanst. 185; 19 R. R.57; Smith v. Winter, 4 M. & W. 467. (x) Sterens v. Lynch, 12 East, 38; 2 Camp. 331; Smith v. Winter, 4 M. & W. 454. (y) Withall v. Masterman, 2 Camp. 179; Clark v. Derlin, 3 B. & P. 363; 7 R. R. 793; Tindal v. Brown, 1 T. R. 167; 1 R. R. 171; English v. Darley, 2 B. & P. 61 ; 5 R. R. 543. () Nicholson v. Revill, 4 Ad. & E. 675; 6 N. & M. 192; 1 Har. & W. 753, where the note was joint and several. (a) Code, s. 57. A voluntary Pitt v. CHAPTER Of contribu co-sureties. in equity to existing securities which the creditor may possess against the principal debtor (d). And he had such a right even at law, on giving a proper indemnity, and might sue in the creditor's name (e). A contract to indemnify a surety entitles the surety to interest (f). A promise by a stranger to indemnify a surety is not within the 4th section of the Statute of Frauds, and therefore need not be in writing (g). If a surety pay money to the creditor under a mistake as to the fact supposed to constitute his liability, he may recover it back (h). A surety who has paid for his principal is a creditor who may be barred by a composition deed, though he have not consented to it (¿). Where the sureties are not, as between themselves, tion between principal and surety, as are a prior and subsequent indorser of a bill or note, but merely co-sureties, as are two or more joint or joint and several makers of a note, if one be called on to pay the whole debt, the others shall severally contribute in equal proportions. And though the same debt be secured by different instruments, executed by different sureties, and though one portion of the debt be secured by one instrument, and one by another, and different sureties execute each, still there is mutual contribution (k); nay, even though the surety seeking contribution did not at the time of the contract know that he had any co-sureties. For the right of a co-surety to enforce contribution does not depend upon contract, but upon the equity of the case (7). (d) See Copis v. Middleton, 1 T. & R. 229; 17 R. R. 226; Hodgson v. Shaw, 3 M. & K. 190; Goddard v. White, 2 Giff. 449; Newton v. Chorlton, 13 Hare, 651. And to what has been realized on them, Gray v. Seckham, L. R., 7 Chan. Ap. 680; 41 L. J., Chan. 281. (e) 19 & 20 Vict. c. 97, s. 5; Batchelor v. Lawrence, 9 C. B., N. S. 543. An indorser compelled to pay is entitled to securities deposited with the acceptor to meet the bill, whether he was aware of the fact or not. Duncan, For & Co. v. New South Wales Bank, 6 App. Ca. 1. And see post, DEPOSITED SECURITIES, Chapter on BANKRUPTCY. (f) Petre v. Duncombe, 20 L. J., Q. B. 242; Er parte Davies, 66 L. J., Q. B. 499. (g) Cripps v. Hartnall, 32 L. J. 381, Exch. Chamber; Batson v. King, 4 H. & N. 739. (h) Mills v. Alderbury Union, 3 Exch. 590. () Hooper v. Marshall, L. R., 5 C. P. 5; 39 L. J. 14. (k) Dering v. Earl of Winchelsea, 2 Bos. & P. 270; 1 Cox, 318; 1 R. R. 41; Mayhew v. Crickett, 2 Swanst. 184; 19 R. R. 57; Whiting v. Burke, L. R., 6 Chan. Ap. 342. (See Craythorn v. Swinburne, 14 Ves. 169; 9 R. R. 264; Reynolds v. Wheeler, 30 L. J., C. P. 350; M Donald v. Whitfield, L. R., 8 Ch. Ap. 733. CHAPTER XX. Action A surety has a right of action against his principal for every sum that he pays, and a right of action against his co-surety as soon as he has paid more than his own due proportion of the debt (m). He has a fresh right of action between coagainst the co-surety for every sum that he pays beyond sureties. that amount. The proper legal remedy for a surety, who has paid more than his due proportion of the debt against his co-surety, was an action for money paid to the use of the co-surety (n). But a surety could not at law recover more than an aliquot part of the debt against his co-surety, although others of the sureties be insolvent (o). To distribute the loss arising from the insolvency of co-sureties, a co-surety must have resorted to equity. And although in equity the loss arising from the insolvency of sureties must be equally borne by the solvent sureties, yet that liability may be restrained by the express contract of the sureties (p). Now a defendant claiming contribution, or indemnity over against any other person, may by leave of a judge give notice to such other person, who, if desirous of disputing the plaintiff's claim, may appear as a party to the action (q): should he not so appear, he will be deemed to have admitted the validity of the plaintiff's claim or judgment against the defendant (r). A collateral surety may contract to be liable only in the event of the default of the principal debtor and the other sureties (s). A surety is not in general liable for interest. The right of a surety to contribution from his co-surety is not prejudiced by the plaintiff possessing a security against the principal debtor which the defendant does not possess, and of which he was not aware (†). contract. It has been held, that a surety on a continuing guarantee Determinahas a right to determine his liability for future advances tion of the by notice (u): even although the duration of the advances be limited by the instrument of suretyship (a). Effect of alteration at common law. Inspection of Bill supposed to be Forged. IF a deed, well and sufficiently made in its creation, shall be afterwards altered by rasure, interlining, addition, drawing a line through the words, though they be still legible, or by writing new letters upon the old in any material place or part of it, either by the party that hath the deed, or any other whomsoever, unless the alteration be by him who is bound by the deed (for he shall not take advantage of his own wrong), or by his consent, the deed has lost its force, and is become void (a). (a) Sheppard's Touchstone, 68. And a deed is not it seems vacated at common law, if the alteration, though material, were with the consent of all the parties. Markham v. Gonaston, Cro. Eliz. 627; Zouch v. Clay, 2 Lev. 35; Com. Dig. Fait, F. 1. |