v. Harradine, 3 Jur. N. S. 488.

With regard to the question, how far the custom of a trade will justify
further indulgence, when the guarantee is not expressly limited in point of
time, see Combe v. Wolfe, 8 Bing. 156 ; Holl v. Iladley, 5 Bing. 54 ; Allan
v. Kenning, 9 Bing. 618; Howell v. Jones, 1 Cr. M. & K.. 97. And see
Simpson v. Manley, 2 C. & J. 12; Holland v. Teed, 7 Hare, 50.

Where a bond creditor, by agreement with his debtor, takes interest on his
debt by anticipation, that will in effect be giving time to the debtor, and will
discharge the surety ; since a court of equity would restrain proceedings on
the bond until the expiration of time for which the creditor had received in-
terest on the bond : White v. Blake, 1 Y. & C. Exch. Ca. 420.

An agreement with the debtor to give him further time, in order to discharge
a surety, must be one that is binding upon the creditor. A mere voluntary
promise to give further time, not acted upon, and which cannot be enforced,
will not, as it makes no alteration in the right or position of the parties, have
that effect: Philpot v. Briant, 4 Bing. 717; S. C, 1 M. & P. 754; Brick-
xoood v. Anniss, 5 Taunt. 614 ; S. C, 1 Marsh, 250 ; Tucker v. Baing, 2 K-
& J. 745 ; and see Clarke v. Wilson, 3 M. & W. 208 ; Heath v. Key, 1 Y. &
J. 434 ; and the remarks of Lord Lyndhurst in Blake v. White, 1 Y. & C-
Exch. Ca. 420; Moss v. Hall, 5 Exch. 46; Stong v. Foster, 17 C. B. 2015
Bell v. Banks, 3 M. & G. 258; 3 Scott, N. R. 497. Although the creditor



536 DISCHARGE OF SURETY.



enter into a binding contract to give further time to the debtor, yet if it be
with a stranger, and not with the debtor, a surety will not be thereby dis-
charged : Eraser v. Jordan, 26 L. J., N. S. (Ch.) 288.

Nor will an agreement to give time have that effect, if it is conditional
upon the performance of an act which the debtor neglects to perform : Bad-
nal v. Samuell, 3 Price, 521 ; Vernon v. Turley, 1 M. & W. 316 ; Price v.
Edmunds, 10 B. & C. 578.

The reason why giving further time to a debtor releases the surety, is this,
that the surety, when the debt under the original contract becomes due, may
upon payment of it file a bill in equity to compel the creditor to allow him to
commence proceedings at once in his name against the debtor ; but the credi-
tor by his contract destroys the benefit which the surety had under the former
contract, as he puts it out of his own power to make good the engagement to
enforce immediate payment from the principal, when the surety would have a
right to require him so to do : The Bank of Ireland v. *Beresford, 6
t* 824 ] Dow, 238 ; Samuell v. Howarth, 3 Mer. 272.

And upon the principle, that the creditor having taken out execution against
the debtor, is a trustee of it for all parties interested, if, without the know-
ledge of the sureties, he withdraws the execution, he thereby discharges the
sureties : Mayhew v. Crickett, 2 Swanst. 185, 190. And see Smith v. Knox,
3 Esp. 47; WiUiams v. Price, 1 S. & S. 581; English v. Darley, 2 Bos. &
P. 61 ; 3 Esp. 49. So where a creditor, by neglecting the statutory forma-
lities, lost the benefit of an execution under a warrant of attorney, which,
according to the agreement of suretyship, he had proceeded to enforce upon
a notice by the surety, it was held that the surety was thereby discharged :
Watson v. Allcock, 1 Sm. & Giff. 319 ; 4 De'G., Mac. & G. 242.

It seems that a surety will not be discharged by giving time, if the reme-
dies of the surety are not diminished or affected, and especially if they are
accelerated. Thus, Hulme v. Coles, 2 Sim. 12, where a creditor took from the
debtor a cognovit in an action he had brought against him, with a stay of execu-
tion until a day earlier than that on which judgment could have been obtained
in the regular course, Sir A. Hart, V. C, held, that the surety was not there-
by discharged, observing that the principle of discharging a surety by the
giving of time by the creditor, was a refinement of a court of equity, and he
would not refine upon it; that, by the arrangement complained of, this was
not given, but the remedy was accelerated. And see Prendergast v. Devey,
6 Madd. 124; Stevenson v. Roche, 9 B. & C. 707; Price v. Edmunds, 10 B.
& C. 578 ; Whitfield v. Hodges, 1 M. & W. 679 ; Jay v. Warren, 1 C. & P.
532.

The surety will not be discharged, if time be given to principal debtor by
his consent or subsequent approval: Tyson v. Cox, T. & R. 395; MayTu w v.
Crickett, 2 Swanst. 185; Clark v. Devlin, 3 Bos. & P. 363; Cowper v.
Smith, 4 M. & W. 519 ; Duffy v. Orr, 5 Bligh, N. S. 620.

It seems, however, where the creditor has obtained a decree against the
surety, that no subsequent dealings giving time to the debtor, will have the



REES V. BERRINGTON. 53T

effect of releasing the surety. See Jenkins v. Robertson, 2 Drew. 351. In
that case there was a direction by a decree in a suit to administer the estate
of the surety, for payment of a bond debt to the creditor. After the decree
the creditor brought an action against the principal debtor, and took a judg-
ment, for payment by instalments without the assent of, or communication
with, the representatives of the surety. It was held by Sir R. T. Kindersley,
V. C, that the estate of the surety was not thereby discharged. " I do not,"
said his Honor, " in any *degree doubt that, as a general rule, the
creditor, by giving time to the principal debtor, discharges the surety ; L -*
but that is not this case. This is a case in which there is a creditor, who has
by the decree in the suit, established his right against the surety. If he had
brought an action against the principal debtor before the decree, and taken, as
has been done here, a judgment by arrangement, giving time, no doubt the
surety would be discharged. But the creditor, having by the decree estab-
lished his right against the estate of the surety, has a right to proceed under
it ; and all that follows is in the nature of execution of the decree, and the
subsequent dealing with the principal debtor does not operate to discharge the
surety from a liability under which he is no longer as surety, but under the
decree."

Nor will the surety be discharged if the creditor, on giving further time to
the principal debtor, reserve his right to proceed against the surety ; because
as Lord Eldon has observed, " the principal cannot raise the objection upon
his right to time as against the surety, as there is the contract of the princi-
pal, arising out of the contract for reserve against the surety, that the latter,
if the creditor goes against him, shall not be deprived of the benefit of the
contract as against the principal :" 18 Ves. 26. And see Ex parte Glenden-
niiuj, Buck. 517; Smith v. Waiter, 4 M. & W. 545; Ex parte Carstairs,
Buck. 560 ; Ex parte Gifford, 6 Ves. 805 ; Duffy v. Orr, 5 Bligh, N. S.
620 ; Owen v. Homan, 4 H. L. Cas. 997, 1038 ; and the question whether
or not the surety has been informed of the arrangement is immaterial : Webb
v. Hewitt, 3 K. & J. 438.

A necessary consequence of a reservation of a creditor's remedies, against
a surety, is a continuance of the surety's right to be indemnified by the prin-
cipal debtor, and this right will not be abandoned, unless a contract to aban-
don it be proved : Close v. Close, 4 Be G-., Mac. & Gr. 176.

But parol evidence is admissible to prove a reservation of the creditor's
rights against the surety. See Wyke v. Rogers, 1 De Gr., Mac. & Gr. 408,
there the plaintiff entered into a bond as a surety for S. Evans. Subsequently
the defendant Rogers, the creditor, took from S. Evans a promissory note for
the amount due, payable in two months, but was unable to recover anything
on a judgment obtained against S. Evans, in consequence of his insolvency.
Rogers having commenced an action against the plaintiff on the bond, he there-
upon filed a bill to restrain proceedings in the action, on the ground that he
was discharged from liability by the giving of the promissory note ; the de-
fendant, by his answer, stated that at the time the promissory note was given,



538 DISCHARGE OF SURETY.



it was distinctly Understood and agreed that it was not to be consi-
[*826] j ere( j as payment of the balance due on the bond, and as substituted
for the bond, but that the bond was to be considered as a security. On the
hearino- an inquiry was directed in respect of the circumstances under which
the promissory note had been given. The Master reported that, though there
was not any written or distinct parol agreement between the parties, yet there
was a general understanding that the giving of the bond was not to affect
the note. It was held by Lord St. Leonards, C, affirming the decision of Sir
J. L. K. Bruce, V. C, that there was no ground for the interference of a
court of equity. " All the cases," said his Lordship, " prove that where an
instrument is taken, which might otherwise operate as a discharge of the
surety, there will be no discharge if the remedies against the surety are
preserved. In the present case an action was brought on the bond, to which
the defendant (the plaintiff here) had no defence ; he therefore comes into
equity for relief. This Court, however, cannot interfere against a legal ob-
ligation, unless an equitable case is made out ; and it must therefore be
shown that the transaction in question released the plaintiff from the obli-
gation. No such case has been attempted to be made out, and I give no
opinion upon it, because it is perfectly clear in law, that an agreement, that
a transaction which would of itself operate to release the surety shall not have
that effect, may be proved by parol evidence. It was said at one time, in the
course of the argument, that parol evidence could not be admitted to im-
peach the promissory note. This, however, was not the purpose for which
the evidence was sought to be introduced; it was only to prevent the collateral
operation of that note by showing that it was not intended to prevent pro-
ceeding on the bond, and thus to release the surety The find-
ing of the Master is plain ; it is in effect that there was a general dealing,
and a general understanding, (which, in point of law, amounts to a stipula-
tion,) that prevented the promissory note in equity from having the effect
of discharging the surety. What, then, a judge of this court has to decide
is, whether or not there was in truth such an agreement as the defendant
contends for : the evidence shows that there was ; and the Master's report
appears to me to be right."

But if time be given by deed, the reservation of the right to go against
the surety should appear there also, as parol evidence is not admissible to
prove it, since the effect of it would be to vary a written instrument : Ex
parte Glendenning, Buck. 517; and, moreover, the reservation must be made
in clear and unambiguous terms : Boidtbee v. Stubbs, 18 Ves. 20.

*The principle upon which the surety is discharged by the creditor
L - 1 J giving time to the debtor is also applicable where the creditor enters
into any new arrangement with the debtor, without the concurrence of the
surety, which will have the effect of altering the situation of the surety.
Thus, in Eyre v. Bartrop, 3 Madd. 221, the plaintiff joined with his brother
in the grant of a redeemable annuity, as a surety for the payment of the same
quarterly. The annuity was secured by the demise of real property of the



REES V. BERRINGTON. 539

plaintiff 's brother, and by a bond and judgment of the' plaintiff and his brother.
The brother afterwards, by deeds, to which the plaintiff was not a party, and
without his concurrence, entered into a new arrangement with the assignees
of the annuity, whereby it was agreed that he should not sue for the annuity
for five years from the date of the deed, or from the death of the grantor's
father, (which should first happen,) and that the annuity should be redeem-
able on different teims. Sir J. Leach held that the surety was wholly dis-
charged, and was not entitled merely to be exonerated from liability to the
arrears of the annuity during the five years, and refused a motion to dissolve
an injunction restraining the assignee of the annuity from proceeding to exe-
cution upon the judgment. His Honor observed, that it could not be denied,
that if, by any arrangement between the creditor and the debtor, the situation
of the surety was altered, that he was thereby discharged ; but it was said,
that the situation of the surety was only partially altered during the five years,
and that, in respect of the subsequent payments, it remained the same. He
was, however, of opinion, that the deeds executed without the concurrence
of the plaintiff, and the change in the terms of the redemption, had either
directly, or by their own consequences, wholly altered the situation of the
surety, and that he was thereby wholly discharged.

In Calvert v. TJie London Dock Company, 2 Kee. 638, Streather, a con-
tractor, undertook to perform certain works for a company; and it was agreed
that three-fourths of the work, as finished, should be paid for, every two
months, and the remaining one-fourth upon the completion of the whole work.
It was held by Lord Langdale, M. R., that the sureties for the due perform-
ance of the contract were released from their liability by reason of payments
exceeding three-fourths of the work done, having, without the consent of the
surety, been made by the company to the contractor before the completion of the
whole work. " The effect," said his Lordship, "of the stipulation was at the
same time to urge Streather to perform the work, and to leave in the hands of
the company a fund wherewith to complete the work, if he did not ; *and
thus it materially tended to protect the sureties. What the company L " -"
did was, perhaps, calculated to make it easier for Streather to complete the
work, if he acted with prudence and good faith; but it also took away that
particular sort of pressure, which, by the contract, was intended to be applied
to him. And the company, instead of keeping themselves in the situation of
debtors, having in their hands one-fourth of the value of the work done, be-
came creditors to a large amount, without any security ; and, under the cir-
cumstances, I think that their situation with respect to Streather was so far
altered, that the sureties must be considered to be discharged from their
suretyship." Ex parte Rushforth, 10 Ves. 409 ; Paley v. Field, 12 Ves. 435 ;
see Archer v. Hudson, 7 Beav. 551 ; Campbell v. French, 6 T. R. 200, over-
ruling French v. Campbell, 2 H. Black. 1G3 ; Archer v. Mall, 4 Bing. 464 ;
Evans v. Whyle, 5 Bing. 485 ; S. C, Moo. & M. 468 ; Whitcher v. Hall, 5 B.
& C. 269; S. C, 8 D. & R. 22; Bacon v. Chesney, 1 Stark. 192; Wright



540 DISCHARGE OF SURETY.



v. Sandars, 3 Jur. N. S. 504 : Small v. Currie, 2 Drew. 102 ; 5 De Gr., Mac.

& a. i4i.

Upon the same principle, where there is a bond of suretyship for an officer,
and by the act of the parties, or by Act of Parliament, the nature of the
office is so changed that the duties are materially altered, so as to affect the
peril of the sureties, the bond will be avoided : Bonar v. Macdonald, 3 H. L.
Cas. 226; Pybus v. Gibb, 6 Ell. & B. 902; and see North Western Railway
Company v. Whinray, 10 Exch. 77; Kitson v. Julian, 4 Ell. & Bl. 854; Bart-
lett v. TJie Attorney- General, Parker, 277. And see Bank of Scotland v. Chris-
tie, 8 C. & F. 214.

The bond, however, by which the sureties are bound may be drawn in lan-
guage sufficiently extensive to continue their liability, notwithstanding there
may be a material alteration of the duties of the person for whom they have
become sureties. See Osioald v. Mayor of Berwick-upon-Tweed, 5 H. L. Cas.
856 ; 3 Ell. & B. 653 ; 1 Ell. & B. 295; Mayor of Dartmouth v. Silly, 7 Ell.
& Bl. 97.

Where, however, the creditor, dealing with the principal debtor, has the
concurrence of the surety, the latter cannot claim to be discharged upon the
ground that his position is altered by such dealing : Woodcock v. Oxford and
Worcester Railway Company, 1 Drew. 521, 530.

Where the creditor releases or compounds with the debtor, without the con-
currence of the surety, although it may be done by mistake, or for the bene-
fit of the surety, he will thereby discharge the surety, {Ex parte Smith, 3 Bro.
C. C 1; Ex parte Wilson, 11 Ves. 410; Ex parte Glendinning, Buck. 517;
Ex parte Carstairs, Buck. 560 ; English v. Barley, 2 Bos. & *P. 61;
L J Lewis v. Jones, 4 B. & C. 506 ;) and it seems, that one partner in a
firm may release or compound with the creditor, so as to bind the firm, and
consequently discharge the surety : Hawkshaw v. Parkins, 2 Swanst. 539.

If the surety has, previously to the release given by the creditor, paid part
of the debt, and given a security for the remainder, the general rule will not
apply, but the creditor, notwithstanding the release, will, in the absence of
evidence to the contrary, retain his right against the surety for the remainder
of the debt : Hall v. Hutchons, 3 My. & K. 428, per Sir J. Leach, M. R.

Although a creditor upon giving time may reserve his right to proceed
against the sureties, he cannot do so if he has given an actual release for the
debt, for it is gone at law; Nicholson v.Revill, 4 Add. & Ell. 675; Kearsley
v. Cole, 16 Mees. & W. 128.

And where the release given by the creditor is one which is effectual only
in equity, the creditor who has given such release to the debtor will be re-
strained from proceeding against a surety, although he may have reserved his
right to proceed against him. See Webb v. Hewitt, 3 K. & J. 438. There
the plaintiff became surety in a bond to the defendant for one Field. After-
wards Field and the defendant entered into an agreement that the defendant
should take all Field's property, and should pay his other creditors five shill-
ings in the pound. Upon the death of Field, the defendant having put the



REES V. BEKRINGTON. 541

bond in suit against the plaintiff, Sir W. Page Wood, V. C, granted a per-
petual injunction, and ordered the bond to be cancelled. "As to giving
time," said his Honor, " the authorities, which are almost innumerable, have
settled that upon any giving of time to a principal debtor, if there be a reserva-
tion of rights against the surety, the surety is not discharged A release,

however, stands upon an entirely different footing. The case of Nicholson v.
Revill, 4 Add. & Ell. 675, which is recognized in Kearsley v. Cole, (16 Mees.
& W. 128,) has decided that, when an actual release is given, no right can
be reserved, for the debt is gone at law. In Nicholson v. Revill, the Court
commented on the observations of Lord Eldon in Ex parte Giffard, (6 Ves.
805,) saying, that if those observations were meant to extend to this, that the
principal debtor could be entirely released, so that the debt should be extin-
guished, and yet the right reserved against the surety, they thought the dicta

went too far In the case before me, there is clearly no discharge at

law by accord and satisfaction, because the instrument by which the accord

and satisfaction is alleged to have been made is not under seal The

only ^question is, what is its effect in equity ? There can be no doubt
that the agreement was an equitable discharge, which would of course L В° J
release the surety. . . . What I rest my judgment on principally is, the result
of this transaction upon the face of it. There is nothing in evidence that shakes
any portion of the agreement. The utmost that the evidence amounts to is,
that there was an intention with this agreement, such as it is, to assert a reser-
vation of right against the surety. I hold, that if such a reservation of right
had been put in it would have been a nullity. If a man, in consideration of
the debt due from his principal debtor, agrees to buy the whole of the debtor's
property, he has been paid ; and if he has been paid, he cannot reserve his
rights."

A surety may, by further contract with the creditor, convert himself, in
relation to the debt for which he was surety, into a principal debtor; and thus,
upon a release being given to the party who was in the first instance the prin-
cipal, lose the benefit of the doctrine, that a release of the principal releases
the surety : Reade v. Lowndes, 3 Jur. N. S. 877.

A surety will not be discharged by the creditor signing the certificate of the
bankrupt debtor after he had proved the debt under the commission, although
the surety may have given him notice not to sign it : Brown v. Carr, 2 Russ.
600 ; S. C. 7 Bing. 508 ; and see Langdale v. Parry, 2 Dowl. & Ry. 837.

If the creditor appropriates any security for the debt to another purpose,
the surety will, to the extent of the value of the security, be discharged.
Thus in Pearl v. Beacon, 3 Jur. N. S. 1187, a person became surety for a
moiety of a debt, with a knowledge that the whole of the debt was secured by
a bill of sale of the furniture of the debtor to the creditors, who were his land-
lords. The creditors took the furniture under a distress for rent, which
became due subsequent to the bill of sale. It was held by the Lords Justices,
affirming the decision of Sir John Romilly, M. R., (reported 3 Jur. N. S.
879,) that the landlords had precluded themselves from appropriating the



542 DISCHARGE OF SURETY.

furniture to any other purpose than the payment of the debt for which it was
given as a security. And that the surety was entitled to be discharged to the
extent of one-half of the value of the furniture. " When the mortgage was
executed/' said Lord Justice Turner, " the defendants in effect entered into a
contract with the plaintiff, which imposed on them the obligation or trust to
hold the property comprised in the bill of sale for the benefit of the plaintiff,
and in exoneration of the debt for which he had become surety, and they
could not now be permitted to exercise their rights as landlords to defeat
*in any manner the obligation or trust they had thus taken on thein-
l -I selves. It was quite clear that the defendants could not have released
the furniture to the debtor without the consent of the plaintiff, nor could
they in any other manner deal with it to the detriment of the surety."

Mere passiveness by the creditor, in not taking proceedings against the
debtor, will not, in the absence of a stipulation in the instrument of surety-
ship, rendering activity on his part necessary, release the surety. See Eyre v.
Everett, 2 Russ. 381, where, although the creditor had neglected to sue the
obligor on a bond for five years, Lord Eldon held, that the surety was not re-
leased. " The surety," said his Lordship, " has no right to say that he is dis-
charged from the debt which he has engaged to pay, together with the prin-
cipal, if all that he rests upon is the passive conduct of the creditor in not
suing. He must himself use diligence, and take such effectual means as will
enable him to call on the creditor either to sue or to give him, the surety, the
means of suing." See also Shepherd v. Beecher, 2 P. Wms. 288; Wright v.
/Simpson, 6 Ves. 734; Lysaght v. Walker, 5 Bligh, N. S. 1 ; Br irk wood v.
Anniss, 5 Taunt. 614; 1 Marsh. 250; Perfect v. Musgrave, 6 Price, 111;
Orme v. Young, Holt, N. P. C. 84; Langdalev. Barry, 1 Dowl. & Ry. 337.

But passiveness may discharge a surety, if there be a stipulation that the
creditor is, on default, to sue the debtor without delay : The Bank of Ireland
v. Beresford, 6 Dow. 233; Hall v. Hadley, 2 A. & E. 758. In Montague v.
Tidcombe, 2 Vern. 518, a man put out his son an apprentice, giving a bond
to his master for his fidelity, taking, at the same time, a covenant from his
master that he would, at least once a month, see his apprentice make up his
cash. Upon the apprentice embezzling cash, and the master bringing an action
on the bond, it was held, on a bill being filed by the father to be relieved
against it, that the bond and covenant ought to be taken as one agreement ;
that the father would be liable, provided the accounts were taken monthly,
but for no more than the master could prove the apprentice embezzled in the
first month, when the embezzlement began.

Upon the same principle a person who becomes surety for the honesty of a
person entrusted with money, will not be discharged, although there may have
been considerable delay in the employer in examining his accounts, or in