8 New Hampshire, 389 ; The Farmers
Bank of Canton v. Reynolds, 13 Ohio,
84; The United States v. Kirkpat-
rick, 9 Wheaton, 760; MLemore v.
Powel, 12 Id. 554; The United States
v. Nichol, lb. 505 ; Doe v. The Post-
master-General, 1 Peters, 318; Mont-
gomery v. Dillingham, 3 S. & M.
467 ; Haynes v. Covington, 9 Id. 479 ;
Caruthers v. Dean, 11 Id. 178; An-
derson v. Mannon, 7 B. Monroe, 217 ;
Johnson v. Searcy, 4 Yerger, 102;
Dawson v. The Real Estate Bank, 5
Pike, 283 ; Creath's Adm'r v. Sims,
5 Howard, 192 ; Locke v. The United
States, 3 Mason, 447; The United
States v. Hunt, 1 Gallison, 42;
Daniels v. Peterson, 3 Comstock, 47 ;
Carter v. Jones, 5 Iredell, Equity,
Kep. 196. And it is in general
well settled, that although an agree-
ment to forbear for a definite period,
founded upon or sustained by a suffi-
cient consideration, will discharge the
surety at once, and by its own opera-
tion, he will not be discharged by any
length of forbearance, even when
founded upon or induced by a promise;
Nichols v. M'Dowell, 14 B. Monroe,
6; the material question being, not
whether there has been indulgence,
but whether there was a contract to
delay or indulge ; Sailly v. Elmore,
2 Paige, 497 ; Vilas v. Jones, 10 Id.
76; Jordan v. Trumbo, 6 Gill & J.
103 ; Draper v. Romeyn, 18 Barbour,
166; The United States v. Simpson,
2 Penna. R. 437 ; 2 American Lead-
ing Cases, 340, 4th ed.
Indulgence to the principal is ac-
cordingly inoperative as a discharge of
the surety, even when granted, in con-
sequence of an express promise, unless
the promise is founded upon a valid
consideration and legally binding;
Townsend v. Riddle, 2 New Hamp-
shire, 448 ; Tudor v. Goodloe, 1 B.
Monroe, 322; The Blackstone Bank
v. Hill, 10 Pick. 129; or persisted
in, after a request from the sure-
ty, that active measures should be
taken for the collection of the debt ;
Hubbard v. Davis, 1 Aiken, 296;
The Montpelier Bank v. Dixon, 4
Vermont, 587 ; Page v. Webster, 15
Maine, 249 ; Mahurin v. Pearson, 8
New Hampshire, 539; Pintard v.
Davis, 1 Spencer, 205 ; Bull v. Allen,
19 Conn. 101; Broughton v. Dvrah
3 Call, 61; Jenkins v. Clark, 7 Ham-
mond, 72 : although an exception pre-
REES V. BERRINGTON.
551
vails on the latter point in some of
the states, which will be noticed
hereafter. A striking application of
this doctrine is presented by the case
of the Adams Bank v. Anthony, 18
Pick. 238 ; where the surety was not
allowed to defend himself against an
action instituted by the creditor, by
showing that the latter had omitted
to include the debt in a prior suit,
commenced by attachment against the
principal, for another demand, al-
though the amount of property seized
under the attachment, was sufficient
to have discharged both demands, had
it been founded on both. And the
general rule, that it is the duty of the
surety to see to the fulfilment of the
contract, has been carried to the ex-
tent of deciding that the creditor may
stop short, in any proceeding which
may have been instituted against the
principal, even at the moment when
it would have been effectual if car-
ried further, and when its discontinu-
ance will result in the actual or pro-
bable loss of the debt.
The creditor may, therefore, not
only omit to bring suit against the
principal, but may delay the prosecu-
tion of a suit actually commenced :
Daniels v. Patterson, 3 Comstock,
47, and push contemporaneous or sub-
sequent proceedings against the sure-
ty to execution, without obtaining
judgment on others, previously insti-
tuted against the principal. Nor is
the right to use all the remedies given
by the contract, at the time and in
the manner, which the creditor may
think best, affected by their passing
into judgment, and becoming a lien
on the real or personal property of the
principal ; Melton v. Howard, 7 How-
ard, (Miss.) 103 ; Caruthers v. Dean,
11 Smedes & IVIarshall, 178. Thus,
it has been decided, that a failure
either to issue execution on a judg-
ment, binding the real estate of the
principal, or to take proper measures
to revive it, by which the lien is lost,
and the judgment rendered unavail-
able, is not an exoneration of the
surety; The United States v. Simp-
son, 3 Penna. 437; Mundorffv. Sing-
er, 5 Watts, 172 ; The Farmers
Bank of Ohio v. Reynolds, 13 Ohio,
84; and the point was held the same
way, where the lien of a judgment
against the principal was lost, by the
failure of the creditor to enrol it ;
Pickens v. Finney, 12 Smedes &
Marshall, 468; M'Gee v. Metcalf,
lb. 535.
It has also been held, in a great
many instances, that the withdrawal
of an execution against the principal,
after it has been placed in the hands
of the sheriff, but, before actual levy,
will not exonerate the surety, even
where it appears that goods, which
were bound by the lien of the execu-
tion, and would probably have been
made available for the discharge of
debt, have been removed by the
debtor, beyond the reach of process,
or levied on and sold by other credi-
tors ; Hetherington v. The Branch
Bank at Mobile, 14 Alabama, 68;
Royston v. Howie, 15 Id. 309 ; For-
bes v. Smith, 5 Iredell, Equity, 369 ;
Lenox v. Front, 3 Wheaton, 520 ;
Sawyer v. Bradford, 6 Alabama,
572 ; The Union Bank of Tennessee
v. Govan, 10 Smedes & Marshall,
333; Newell v. Hamer, 4 Howard,
(Miss.) 684 ; Hunter's Ad' or v. Jett,
4 Randolph, 104 ; M'Kenney's Ex'ors
v. Waller, 1 Leigh, 434 ; Alcock v.
Hill, 4 Id. 622 ; Humphrey v. Hitt,
552
DISCHARGE OF SURETY.
6 G rattan, 509 ; Wright v. Yell, 8
English, 503.
In Hampton v. Levy, 1 M'Cord,
Ch. 107, followed in Lang v. Bre-
vard, 3 Strobhart, Equity, 59, the
same doctrine was applied to liens on
the property of the principal, created
for the debt by his voluntary act, and
not in the course of adverse proceed-
ings; and it was decided chat the omis-
sion of the creditor to record a mort-
gage given as collateral security, by
which it was postponed to subsequent
incumbrances, could not be set up as
a defence to an action against the
surety.
But, although the creditor is not
bound to take active measures to en-
force the payment of the debt, and
may, therefore, stop short in those
which he has taken, even when their
further prosecution would have been
successful, yet, he is not entitled to
relinquish any hold which he has ac-
tually acquired on the property or es-
tate of the principal, and which might
have been made effectual for the pay-
ment of the debt. This is a neces-
sary result of the rule, that a creditor
shall not arbitrarily shift the burden
of the debt, from the property of the
party primarily liable for its payment,
and impose it on another whose liabi-
lity is secondary, under which a re-
lease of land, held by a mortgagor
from the lien of the mortgage, will
discharge other land, bound by the
same mortgage in the hands of a ven-
dee ; ante, vol. 2, p. 271. It has con-
sequently been decided, that when
the property of the principal has been
attached or taken in execution by
the creditor; Mayhem v. Crickett, 2
Swanston, 193 ; Cooper v. Wilcox, 2
Dev. & Bat. Eq. 90 ; The Common-
wealth v. Miller, 8 S. & K. 452; Lich-
tenthaler v. Thompson, 13 Id. 157;
The Commonwealth v. Haas, 16 Id.
252 ; Dixon v. Ewing, 3 Hammond,
280 ; The Bank v. Matson, 24 Mis-
souri, 333 ; or when it has been volun-
tarily delivered to him, as security for
the debt; Baker v. Briggs, 8 Pick.
122; Law v. The Hast India Co.,
4 Vesey, 829; the lien thus acquired
cannot be relinquished, without dis-
charging the surety, to an extent cor-
responding with its value; Payne v.
The Commercial Bank, 6 Smedes &
Marshall, 24; Carpenter v. Devon,
6 Alabama, 718 ; Smeed v. White, 3
J. J. Marshall, 525 ; Givens v. Bris-
coe, lb. 534 ; Jones v. Bullock, 3
Bibb, 467; The Farmers Bank of
Canton v. Reynolds, 13 Ohio, 84 ;
Baker v. Fordyce, 9 Barr, 275; Tal-
mage v. Burlingame, lb. 21 ; Fergu-
son v. Turner, 7 Missouri, 497; Cu-
ran v. ( 'olbert, 2 Georgia, 239 ; Brown
v. Biggins, 3 Id. 405. The same re-
sult "will follow, when the securities
given by the principal are vitiated by
the negligence or usury of the credi-
tor, for otherwise, the surety would be
injured by a wrongful act, without
having a remedy; Hayes v. Ward, 4
Johnson, Ch. 123 ; Capel v. Butt r,
2 Simmons, 457 ; Burgher v. Du-
phorn, 9 Gill, 314. And it may be
laid down as a general principle, that
the creditor is bound not to relinquish
any right or security which can con-
duce to the safety or indemnity of the
surety, and will be responsible either
for refusing to receive or for giving
up that which, if accepted or retained,
would have been performance or pay-
ment; Ferrine v. The Firemen's Ins.
Co., 22 Alabama, 575 ; 2 American
Leading Cases, 345, 4th ed. Hence,
KEES V. BERRINGTON.
553
he caunot, it would seem, reject a ten-
der by the principal, without dis-
charging the surety j Johnson v. Mills,
10 Gushing, 503 ; nor will he be en-
titled to make payments on his own
part, in advance, which were to be
kept back by the terms of the con-
tract, as a security for its fulfilment,
or to proceed to pay after the default
of the principal has deprived him of
the right to receive ; Taylor v. Jeter,
23 Missouri, 244. Thus, in Taylor
v. Jeter, payments made by the owner
of a house, to the contractor, by whom
it had been erected, after notice that
claims had been filed against it by the
material man and mechanics, were
held to be wrongful, as it regarded
the sureties of the contractor, and
consequently to free them, pro tanto,
from responsibility for his breach of
the contract. It is, however, well set-
tled, that the negligence or default
of the creditor, with regard to the
property or securities held for the
debt, is only material when it has re-
sulted in actual injury, and that the
surety will be discharged only to the
extent of the injury suffered; Ward
v. Yass, 7 Leigh, 135 ; Payne v. The
Commercial Bank of Natchez, 6
Smedes & Marshall, 24 ; JVeff's Ap-
peal, 9 W. & S. 36; Everly'v. Rice,
8 Harris, 297 ; although when the
act of the creditor is wrongful, and
has resulted in the loss of a lien
or remedy, the law will presume in-
jury, unless its existence is clearly dis-
proved ; Holt v. Bodey, 6 Harris, 207;
The Bank v. Colcord, 15 New Hamp-
shire, 119; Loomis v. Fay, 24 Ver-
mont, 240 ; Neff's Appeal, 9 W. &
S. 36.
It is somewhat difficult to reconcile
the decisions, that the withdrawal of
a levy discharges the surety, with
those which hold, that the counter-
maud of the writ, before levy, is not
a discharge. There seems no distinc-
tion in principle, between a waiver of
the lieu, which arises as soon as the
writ comes to the hands of the sheriff,
and of that which exists after actual
levy, for both are legally binding,
although the former is liable to be
defeated by contingencies, which
would not affect the latter.
The only mode of getting over the
difficulty is, by regarding the former
class of decisions as founded, not on
the peculiar equity of the surety, but
on the general principle, that an ac-
tual levy is a prima facie satisfaction
of the debt, which may be rebutted
in the case of a principal debtor, by
showing, that no injury has been sus-
tained, by the subsequent, withdrawal
of the execution, but not in that of
sureties who are necessarily injured,
when property primarily liable for
the debt is diverted to other pur-
poses ; The Commonwealth v. Miller,
8 S. & R. 452; The Commonwealth v.
Haas, 16 Id. 252 ; Green v. Burke,
23 Wend. 490. It is, however, some-
what doubtful, whether the English
law recognizes the distinction taken
in the American cases, between the
withdrawal of an execution before and
after levy. It was held in Williams
v. Price, 1 Simons & Stewart, 581,
that a direction to the sheriff, not to
levy under an execution issued on a
judgment, which had been assigned
to the creditor, as collateral security,
in consequence of which other execu-
tions obtained a preference, was a dis-
charge, pro tanto, of the debt, on ac-
count of which the security was given ;
and in Ex parte Mure, 2 Coxe, 63,
554
DISCHARGE OF SURETY.
the same result was held to follow,
from the delay of the creditor to issue
execution on a judgment also assigned
as security, until the judgment debtor
became insolvent. The parties thus
discharged by the neglect of the cre-
ditor, were principal debtors, but the
defence would have been at least
equally effectual had they been sure-
ties. It is obvious, that the obliga-
tion to enforce the remedies held for
the debt, against third persons, is
carried much further in these cases,
in favor of the principal, than the
creditor is obliged to go under the
American authorities, against the prin-
cipal, in favor of the surety.
The decisions which deny the neces-
sity for diligence, with respect to the
remedies against the principal, may,
perhaps, be reconciled with those
which assert it as to the collateral se-
curities held for the debt, on the dis-
tinction between the rights which the
creditor holds under the contract,
against the parties, and those which
he has derived from the parties against
third persons, as security for the con-
tract. The latter are regarded as
trusts, and as imposing the duty of
diligence in their management, while
the former are held by the creditor,
solely for his own benefit, and need
not be exercised unless he thinks
proper. Thus, we have seen that a
failure to take proper measures to
collect a judgment, assigned by a
debtor as collateral security, was held
to discharge the debt itself, and with
it, the obligations both of principal
and surety. This was evidently on
the ground, that the acceptance of the
assignment, which removed the judg-
ment from the control of the assignor
and placed it within that of the as-
signee, bound the latter to use proper
exertions to render it effectual for the
purpose for which it was assigned, and
at all events not to allow it to become
unavailable for all purposes. This
principle holds good, as to every right
of action against third persons, which
a debtor transfers to a creditor on ac-
count of the debt. In every such case,
negligence, though passive, willoperate
as a defence to a subsequent suit for
the debt itself, although it is not al-
ways easy to determine the precise
point at which negligence begins.
The law was so held in Ex parte Mure
and Williams v. Price, and again in
Goodloe v. Clay, 6 B. Monroe, 236.
But as the remedies of the creditor
under the contract, against the person
or estate of the principal, are not held
as trusts for the surety, he will not
be exonerated by any degree of pas-
sive neglect, in failing to enforce them.
This rule applies not only to the right
of action against the person of the
principal, in its original form, but
after it has passed into a judgment,
and become a lien on his estate. Al-
though, therefore, a failure to revive
the lien of a judgment, on the real
estate of a third person, may discharge
the principal, a similar failure, with
regard to a judgment against his es-
tate, will not exonerate the surety;
ante, 551. When, however, goods or
securities are delivered by the princi-
pal to the creditor, on account of the
debt, a lien is created which cannot
be surrendered before payment, with-
out a wilful disregard of the equity of
the surety, involviug the loss of the
right of recourse against him. This
result does not depend on the peculiar
equity of the surety, but would occur
equally between co-sureties, or in
REES V. BERRINGTON.
555
favor of a principal debtor; Nixsen v.
Lyell, 5 Hill, 466 ; Goodloe v. Clay,
6 Monroe, 236. The principle is the
same, where the lien acquired by a
levy on the goods of the principal is
relinquished, and would no doubt take
effect, were the lien of a judgment on
his real estate released, and not mere-
ly suffered to expire. Such a release,
although merely of the land and not
the debt, would be an act wilfully
done to the injury of the surety, and
would, therefore, fall on the other side
of the line, which separates mere neg-
ligence from positive default. Thus
it was held in Nelson v. Williams, 2
Dev. & Bat. Eq. 118, that any trans-
action between the creditor and third
persons, by which the lien of a judg-
ment on the real estate of the princi-
pal is rendered ineffectual, and the
burden of the debt cast on the surety,
will discharge the latter. In this case
the creditor had promised the surety,
to enforce the judgment against the
land by execution, and thus bound
himself to active measures to collect
the debt ; but the court chiefly relied
on the breach of the obligation not to
render the remedies for the debt in-
effectual, arising from the relations
between the parties apart from the
promise.
In Schroeppel v. Shaw, 5 Barbour,
S. C. 580, the court expressed the
opinion, that the duties of the creditor
are the same, with regard to liens ac-
quired by proceedings instituted on
the contract, and those which are held
as collateral security for its perform-
ance, against the property of third
persons. But this ground cannot be
maintained, without denying that the
duty of active diligence exists in the
latter case, or asserting its existence
in the former '; positions which are in-
consistent with the authorities, both
in this country and England. Accept-
ing the assignment of a judgment
against a third person as security for
the debt, makes it the duty of the
creditor not to suffer the lien of the
judgment to expire, but he is under
no such obligation as it regards the
right of action on the contract itself,
either before it has passed into judg-
ment or afterwards.
The American authorities, however,
do not carry the duty of the creditor
to take active measures, for the pur-
pose of making the collateral securi-
ties taken for the debt, available for
its payment, as far as the English. It
is well settled in both countries, that
actual payments made on account of
such securities to any one, who is au-
thorized to receive them on behalf of
the creditor, will enure in discharge
of the debt, even where they do not
actually reach his hands; Beale v.
The Bank, 5 Watts, 529. And it is
certain that he can take no step of a
nature to impair the power of collect-
ing such securities, without making
himself liable to the full extent of
their value; Nexsen v. Lyell, 5 Hill,
466. But it would appear doubtful,
whether he is bound under our law to
take active measures for their collec-
tion, either by bringing suit, or by
issuing execution, when they have
passed into judgment; Orm&by v.
Fortune, 16 S. & R. 302 ; M'Lughan
v. Bovard, 4 Watts, 308. Thus it
was held in the recent case of Schroep-
pel v. Shaw, 5 Barbour, S. C. 580;
3 Comstock, 446, that the delay of
the creditor, in proceeding upon a
mortgage against a third person, which
had been received from the principal
556
DISCHARGE OF SURETY.
as collateral security, did not dis-
charge the surety, although it appeared
that the mortgage might have been
made effectual for the payment of the
debt, by proper exertions. This de-
cision seems irreconcilable with those
of Ex parte Moore and Goodloe v.
Clay, which go to the length of charg-
ing the creditor with losses, arising
from passive negligence, as well as
actual default.
In Schroeppel v. Shaw, an opinion
was expressed by the court below,
that the rule which governs the rela-
tions between the creditor and the
principal on the contract itself, is
more rigorous than that which pre-
vails, with regard to the collateral
securities taken for the debt. This
is so far true, that anything which
varies the liability imposed by the con-
tract, will discharge the surety even
when he has sustained no real injury,
while no default or omission, with re-
spect to collateral securities, can be
material, unless it has resulted in
some actual damage. But the Eng-
lish cases hold the creditor to a stricter
liability in other respects, in the pro-
secution of his remedies on such secu-
rities, than on the contract itself, and
make him answerable for losses, re-
sulting from a failure to take proper
steps to render them effectual ; while
it is agreed on all hands, that he is
not bound to proceed against the per-
son or estate of the principal, even
when the omission to do so, has the
effect of throwing the whole of the
debt on the surety.
The result of the cases as a whole
seems to be, that the creditor is under
no obligation to use diligence, in the
pursuit of his remedies on the con-
tract against the principal, even when
they have passed into judgment or
execution, and become a lien on real
or personal property. But he cannot
retract any step once taken, which, if
unretracted, would enure as an actual
satisfaction of the debt, and although
not obliged to use the remedies for
the recovery of the debt actively him-
self, he is bound not to adopt any
course of a nature to impair their effi-
ciency, and render them unavailable
for the use of the surety. On the
other hand he must use due diligence
in the management and collection of
collateral securities, binding the per-
sons or estates of third persons at the
risk of discharging the debt itself, if
guilty of negligence, and with it of
course all liability on the part either
of principal or surety. The nature of
his relations towards collateral secu-
rities, binding the property of the
principal, is perhaps more doubtful,
for they may be considered as stand-
ing on the same footing with the reme-
dies on'the original contract, and cer-
tainly cannot be considered as trusts
for the principal, whatever they may
be for the surety. There is no doubt,
that the surety will be discharged by
every act, which directly impairs their
efficiency or value, but it is question-
able, whether any obligation exists to
take active measures, for the purpose
of rendering them available.
It has been seen, that in Laing v.
Brevard, the neglect to record a mort-
gage against the real estate of the prin-
cipal was not allowed to exonerate the
surety, while in Capet v. Butler, he
was held to be discharged by a similar
neglect, with regard to a bill of sale
of a vessel given as security by the
principal for the debt. But in the
latter case the contract between the
REES V. BERRINGTON.
557
principal and surety on the one side,
and the creditor on the other, express-
ly stipulated that the bill of sale
should be given, and thus rendered it
the duty of the creditor to take proper
measures to render it effectual, which
seems enough to reconcile this deci-
sion with that of Laing v. Brevard,
where no such stipulation existed.
The weight of authority seems to
be, that the creditor is not bound to
take active measures for the collection
of the debt, even when as in cases of
bankruptcy or insolvency, the failure
to do so constitutes a legal bar to all
remedy against the principal, and
thus has the effect of throwing the
whole burden of the debt on the
surety. Thus the law prescribes a
period in many parts of this country,
within which claims against the estate
of a deceased debtor must be pre-
sented to his representatives, and
makes a failure to comply with this
provision, a loss of the debt, if the es-
tate prove insolvent, and in some of
the states, even when it does not.
But it has, notwithstanding, been de-
cided in a number of cases, that an
omission on the part of the creditor,
to present his claim to the representa-
tives of a deceased principal debtor,
will not debar him from a subsequent
recovery against the surety ; Sibley v.
M'Allaster, 8 New Hampshire, 389 ;
Johnson v. The Planters' Bank, 4
Smedes & Marshall, 165 ; Cohea v.
The Commissioners of The Sinking
Fund, 7 Id. 437.
But in Clark v. Hill, 9 Vermont,
147, and fflCollum v. Hinckley, lb.
143, it was decided, that where the
law makes a failure to present a de-
mand against the estate of an insol-
vent, within a specified time after his
death, an extinguishment of the de-
mand, and not merely of the remedy,
it cannot subsequently be made a
ground of recovery against the surety.
It has been stated above, that the
surety may have recourse to equity,
to enforce the performance of the con-
tract by the principal, and make the
creditor a party, in order to obtain the
use of his remedies, in furtherance of
this object; ante, vol. 1, p. 144; 2