Bank, 6 Smedes & Marshall, 24 ;
Harnsberger's Ex'r v. Geiger's Ad'rs,



REES V. BERRINGTON.



56;



3 Grattan, 144; Holller v. Eyre, 9
Clarke & F. 1, 52. Acts done under
an illegal agreement, or an agreement
destitute of legal validity, may, bow-
ever, result in a new and valid exe-
cuted contract, and thus have an ef-
fect which could not have been pro-
duced by the agreement itself, while
still executory; and hence, an agree-
ment for delay, made on Sunday, in
consideration of a payment to be made
at a subsequent period, will discharge
the surety, if the payment be made,
even when the agreement was origi-
nally void; Uhler v. Appleyate, 2
Casey, 140 ; and the same thing has
been held of the execution of an agree-
ment, void for usury, by actual pay-
ment of the usurious interest; Vilas
v. Jones, 10 Paige, 76; Austin v.
Darwin, 21 Vermont, 38; Turrill v.
Boynton, 23 Id. 142 ; on the ground
that the right to set up the illegality
of a usurious payment, in avoidance of
the contract under which it is made,
belongs to the party who makes the
payment, and not to those by whom
it is received; Armistead v. Ward,
2 Patton & Heath, 504 ; La Farge
v. Herter, 5 Selden, 241 ; although
this latter proposition has been ques-
tioned ; Vilas v. Jones, 1 Comstock,
274 ; and would seem not to be ap-
plicable, unless the usury is paid in
advance, or before the expiration of
the period during which the creditor
has promised to forbear; Vilas v.
Jones; Pyke v. Clark, 3 B. Monroe,
262 ; Scott v. Hill, 6 Id. 285 ; Pat-
ton v. Shanklin, 14 Id. 325 ; 2 Am.
Lead. Cas. 420, 4th ed.

An agreement with the principal
to vary the contract, must obviously
be equally ineffectual, as a legal dis-
charge of the surety, whenever it is



legally inoperative, whatever the cause
which interferes with its operation.
And as the obligation of a contract
under seal cannot be varied at com-
mon law, without resorting to means
of the same efficacy as those from
which it is derived, it has been held,
that a parol variation of a sealed in-
strument cannot be enforced at law
by the principal ; Cordwent v. Hunt,
8 Taunton, 596; West v. Blakeioay,
2 M. & G. 729, and cannot, therefore,
enure as a legal discharge of the sure-
ty, although it will be effectual in
equity, when founded upon a suffici-
ent consideration ; Davey v. Pren-
dergrass, 5 B. & Aid. 187 ; Locke v.
The United States, 3 Mason, 446;
Steptoe's Ad'r v. Harvey, 7 Leigh,
501 ; Tate v. Wymond, 7 Blackford,
240 ; Carr v. Howard, 8 Id. 190 ;
Yates v. Donaldson, 5 Maryland, 389 ;
Devers v. Ross, 10 Grattan, 252.

It has, notwithstanding, been held
by many of the tribunals of this
country, that although the obligation
of a sealed contract cannot be varied
or discharged by an agreement of less
solemnity, the rights which it confers
may be waived by the party entitled
to enforce them ; and that when he
has authorized or sanctioned a non-
performance of the contract, he can-
not recover for a breach while the as-
sent thus given remains unrevoked
Fleming v. Gilbert, 3 Johnson, 528
Langworthy v. Smith, 2 Wend. 587
Leavitt v. Savage, 16 Maine, 72
Marshall v. Craig, 1 Bibb, 379 ; 2
American Lead. Cases, 773, 4th ed.
Hence, a license or dispensation to
depart from, or violate the terms of a
specialty, acted upon by the principal,
to the injury of the surety, may, no
doubt, operate as a defence against



566



DISCHARGE OF SURETY.



the creditor; and in Johnson v. Mills,
10 Cushing, 503, the sureties in a bond
o-iven by a collector of taxes, to a town
treasurer, were held to be discharged,
by proof that the collector bad called
to pay over the amount which he had
received, an d had been told by the trea-
surer, that he might retain the money
for the present, and use it for his own
purposes. Even when the license
thus given is without consideration,
and revocable at pleasure, it will be
sufficient to discharge a surety, whose
liability is merely that of a guarantor,
for he can neither be made answerable
for the breach at the time fixed for
performance, which the creditor has
authorized, nor for a subsequent de-
fault, because he has only guaranteed
a performance at the time; The
United States v. Howell, 4 W. C. C.
K. 620.

But when the surety has under-
taken to perform the contract himself,
and not merely that it shall be per-
formed by the principal, he will not
be discharged, unless his right to en-
force its performance by the latter,
has been impaired or suspended. A
parol dispensation with the perform-
ance of a sealed contract, will not
therefore exonerate a surety, who has
made himself directly liable for its
performance, unless founded upon a
consideration. But when thus sup-
ported, it will be equitably, if not le-
gally, binding as a contract, and will
discharge the surety in equity, and in
most of the states of this country, at
law, by precluding him from enforc-
ing the original contract against the
principal; Sm,ithv. Tunno, 1 M'Cord,
Ch. 443 ; The Bank of Stubenville v.
Leavitt, 5 Ohio, 207 ; The Bank of
Stubenville v. Uocje, 6 Id. 17; Artcher



v. Dour/lass, 5 Denio, 509 ; Dicker-son
v. The Commissioners, 6 Indiana, 128.
Much of the confusion which exists
on this point, has arisen from suppos-
ing, that the surety will not be dis-
charged unless the contract with the
creditor is actually varied, while the
ti'uth would seem to be, that all that
is required is an agreement to vary it,
which would give rise to an action if
broken ; Dickerson v. The Commis-
sioners, ante.

It has been held on several occa-
sions, for reasons not unlike those
which prevail when sealed instruments
are in question, that the equity of the
surety terminates, with regard to the
creditor, as soon as a judgment is ob-
tained against him by the latter, and
the prior obligation is merged in the
new one created by the law; LaFarge
v. Hcrter, 3 Denio, 157 ; Kaylor v.
Moody, 3 Blackford, 92 ; Deberry v.
Adams, 9 Yerger, 52; Findlay's
Ex'r& v. The Bank of the United
Stales, 2 M'Lean, 44 ; Bay v. Tall-
mddge, 5 Johns. Ch. 305; while it
was said in the recent cases of Mar-
shall v. Aiken, 25 Vermont, 328, and
Derrick v. The Ocean County Bank,
1 "Williams, 584, that a defence found-
ed on time given to the principal, will
not avail the surety after judgment, at
law, whatever may be its effect in
equity. But as the equity of the
surety against the creditor, is founded
upon that which subsists between him-
self and the priucipal, and as this un-
questionably survives the judgment,
there is every reason why it should
uphold the other, nor is it easy to see
why the creditor should be better en-
titled to disregard the equitable rights
of the surety, after obtaining judg-
ment against him, than before. One



REES V. BERRINGTON.



56T



of two defendants may, unquestion-
ably, claim subrogation on a judg-
ment whicb has been rendered jointly
against both, on the ground that the
latter is a principal, and he himself a
mere surety, and any act of the creditor
which destroys or impairs the right of
subrogation, will discharge the deb-
tor; ante, vol. 1, p. 153 ; vol. 2, p. 274.
Accordingly, the recent course of deci-
sion is strongly in favor of the doctrine,
that whatever would exonerate the
surety, while his obligation is merely
one of contract, will have the same
effect, after it has passed into judg-
ment; The Commonwealth v. Miller,

8 S. & R. 452 j Potts v. Nathans, 1
W. & S. 155; The Manufacturers
Bank v. The Bank of Pennsylvania,
7 Id. 335 ; Talmadge v. Burlingame,

9 Barr, 21 ; Carpenter v. King, 9
Metcalf, 511 ; Bangs v. Strong, 10
Paige, 11 ; 7 Hill, 250 ; 4 Comstock,
315 ; Boughton v. The Bank of Or-
leans, 2 Barbour, Ch. 458 ; Storms v.
Thorn, 3 Barbour, 314 ; Hubbell v.
Carpenter, 5 Id. 520 ; La Farge v.
Herter, 11 Id. 159. But the better
opinion would seem to be, that as an
endorser who has received value, is
not a surety, although the form of his
obligation renders him a guarantor,
(Pitts v. Congdon, 2 Comstock, 352,)
he will not be discharged by time
given to the maker, after his own lia-
bility has been rendered direct by a
judgment against himself; Lennox v.
Prout, 3 Wheaton, 520 ; Poll v. Ford,
2 Chitty, 125, although the point was
held differently in The Manufacturers
Bank v. The Bank of Pennsylvania,
7 W. & S. 335, and the relation be-
tween maker and endorser said to be
the same before and after judgment.

In order to discharge the surety,



there must noc only be a sufficient
consideration, to support a promise
for delay on the part of the creditor;
but the promise must be actually or
impliedly given, and the rec«ipt of
additional or collateral security from
the principal, although amply suffi-
cient to sustain such a promise, will
go no part of the way, in general,
towards proving that it was actually
made ; The Bank of Utica v. Ives, 17
Wend. 501 ; Elwood v. Deifendorf 5
Barb. S. C. 398 ; Wade v. Staunton,
5 Howard, 631 ; The United States
v. Hodge, G Id. 279 ; Cruger v. Burke,
11 Texas, G94 ; and the same thing is
true of payments of principal or in-
terest in advance, or the transfer of
value in any other form, a creditor
being fully entitled if not bound, to
accept any means of payment or in-
demnity offered by the principal, with-
out releasing the surety from the per-
formance of his part of the obligation ;
Harnsberger v. Kinney, 13 Grattan,
511.

There are, however, certain securi-
ties, which imply an agreement for
the suspension of the demand, on ac-
count of which they are taken, and
carry with them a sufficient considera-
tion to support it. Thus it is well
settled, that taking a bill or note pay-
able at a future day by the debtor, or
as it would seem on the same day by a
third person, on account of a debt, is
a prima facie, if not an absolute sus-
pension of the debt; Stedman v.
Gooch, 1 Espinasse, 4; Walton v.
Mascall, 13 M. & W. 452 ; Baker v.
Walker, 14 Id. 465 ; Price v. Price,
16 Id. 232 ; and consequently an abso-
lute discharge of all parties, whose
liability for its payment is merely that
of sureties or guarantors; Okie v.



5G8



DISCHARGE OF SURETY.



Spencer, 2 Wharton, 253 ; Mercer v.
Lancaster, 5 Barr, 160; Myers v.
Welles, 5 Hill, 463 ; Fellows v. Pren-
tiss, 3 Denio, 512 ; Bangs v. Mosher,
23 Barbour, 478 ; unless the presump-
tion which arises on the face of the
transaction, is rebutted by proof that
the instrument was taken merely as ad-
ditional or collateral security, and that
the debt was not to be suspended ;
Armistead v. Ward, 2 Pat. & Heath,
504; and in Armistead v. Ward,
the acceptance of notes, payable at
a future day, was held to discharge
the sureties in a bond, notwithstand-
ing the objection that an obligation
under such seal cannot be varied or
rescinded by parol, or by anything of
less solemnity than that to which it
owes its origin ; 2 American Leading
Cases, 271, 4th ed.

Some of the cases treat the pre-
sumption, that the debt is suspended,
andthe surety consequently discharged
by the receipt of such a security, as a
presumption of law, which cannot be
controverted; Walton v. Mascall ;
Felloicsv. Prentiss; Okie v. Spencer;
but there are others, which adopt the
more reasonable doctrine, that the
question is one of intention; and that
the suspension of the debt, and conse-
quent discharge of the surety, depend
on the understanding of the parties at
the time when the security is given
Weakly v. Bell, 9 Watts, 273 ; Rip
ley v. Greenleaf, 2 Vermont, 129
Pring v. Clarkson, 1 B. & C. 14
Wade v. Stanton, 5 Howard, 631
Armistead v. Ward.

In the recent case of Elwood v.
Deifendorf, 5 Barbour, S. C. 398, the
court seems to have supposed, that
the prima facie effect of taking a note
payable at a future day, on account



of a debt, is merely to create a colla-
teral security for the debt, and not to
suspend it, and will not, therefore,
take effect as a discharge of the surety,
without an express agreement for for-
bearance. But this decision cannot
be reconciled with those of Felloics v.
Prentis and Okie v. Spencer, nor with
the general current of authority which
sustains the position, that the debt
will be suspended by implication, un-
less there is evidence that the under-
standing of the parties was, that it
should not.

A promise by the creditor to ex-
onerate the surety, or to look solely
to the principal, can have no effect
of itself upon the liability imposed
by the contract, unless founded upon
a sufficient consideration. But when
the surety is induced by such a pro-
mise, to surrender property or secu-
rities received from the principal, or
to postpone or relinquish any of the
means of indemnity, to which he
micht otherwise have resorted, it will
take effest as an equitable estoppel,
and deprive the promisor of the
power of retraction ; Baker v. Briggs,

8 Pick. 122; Harris v. Brooks, 21
Id. 195 ; Westmoreland Bank v. Klin-
gensmith, 7 Watts, 523. The result
will be the same, when the creditor
mistakenly, and without any fraudu-
lent intent, informs the surety that
the debt is paid, or adopts any other
course, of a nature to mislead him
with regard to the extent or existence
of his liability, and the latter, in con-
sequence, surrenders a security held
for its payment; Carpenter v. King,

9 Metcalf, 511 ; Ad'ors of Wilson v.
Green, 25 Vermont, 450. But as the
discharge of the surety is dependent,
in this class of cases, on the doctrine



REES V. BERRINGTON.



569



of equitable estoppel, and not on the
variation of the contract with the
principal, it will not take place unless
a course has been adopted on the
faith of the statements, or promises
of the creditor, which cannot be re-
tracted or withdrawn without injury;
Hogaboom v. Herrick, 4 Vermont,
131 ; nor, as it would seem, unless
the conduct of the creditor is marked
by some violation of good faith or fair
dealing; Wilson v. Green, 25 Ver-
mont, 450 ; wrong on one side and
injury on the other, being the essen-
tial ingredients in every equitable es-
toppel ; 2 Smith, Lead. Cas. 645, 5th
Am. ed. In Kingsley v. Vernon, 4
Sandford, 361, a statement by the
holder of a bill, that it had been paid,
by which the endorser was led to de-
lay proceedings against the acceptor,
until the latter became insolvent, was
however, held to be a good defence to
the endorser, whether the statement
was made in good faith or fraudu-
lently.

The relation of principal and sure-
ty is not dependent on the form of
the contract, and may exist not only
when the obligation is primarily or
solely binding on the surety, but when,
as in the case of a note made for the
accommodation of the payeee, he ap-
pears, on the face of the instrument,
as the only party bound by its terms,
while the principal is prima facie en-
titled to insist on its performance; Lee
v. Rook, Mosely, 378 ; Moore v. The
Wesley Clmrch, 10 Barr, 273 ; Mauri
v. Heffernan, 13 Johnson, 58 ; Ap-
gar v. Hiler, 4 New Jersey, 812 ;
ante, vol. 1, p. 169. But in all
that regards the creditor, the surety
is bound by the terms of the contract,
and cannot claim to be discharged as



a surety, when he has expressly con-
tracted as a principal. Thus it was
held in the case of Sprigg v. The
Bank of Mount Pleasant, 10 Peters,
257 ; 14 Id. 201, that an obligor in
a bond, who binds himself expressly
as principal, and not as surety, waives
the rights, which he would other-
wise have in the latter capacity, and
cannot set up an agreement to give
time to the principal, as a defence,
either at law or in equity; and the
same principle was applied in The
Claremont Bank v. Wood, 10 Ver-
mont, 582, to a note in which both
of the makers were expressly describ-
ed as principals. These decisions ob-
viously stands upon the same ground
with those which hold, that the sure-
ty will not be discharged by any act
or agreement to which he has given
his assent, and rest on the general
principle, that every one may waive
a right, which has been introduced
solely for his own benefit. This
principle is also held to apply where
the surety, without expressly relin-
quishing his privilege as such, holds
himself out as primarily and solely
liable for the performance of the con-
tract as principal, and thus gives the
creditor a right to act as if such were
his real character ; and it has conse-
quently been decided, that the maker
of a promissory note, or the acceptor
of a bill, cannot claim to be discharg-
ed on the ground of time given to a
party, for whose accommodation the
instrument was made or accepted ;
Fentum v. Pocock, 5 Taunton, 192 ;
The Bank of Montgomery v. Walker,
9 S. & R. 229 ; 12 Id. 382 ; Lewis
v. Hanchman, 2 Barr, 416 ; Murray
v. Judah, 6 Cowen, 484 ; Clopper v.
The Union Bank of 3Iaryland, 7



570



DISCHARGE OF SURETY.



Harris & J. 92 ; The Farmers and
Mechanics Bank v. Rathhone, 26
Vermont, 19 ; The Bank of Ireland
v. Beresford, 6 Dow, 233 ; Harrison
v. Courtauld, 3 B. & Ad. 36; and
the better opinion would seem to be,
that those who make themselves pri-
marily liable, as acceptors or makers,
for the accommodation of others, can-
not claim the privileges of sureties,
even when the true nature of the
transaction is known at the time when
the instrument is taken ; Fentum v.
Focock.

The language of Lord Eldon, in
Ex parte Glendenning, 1 Buck, 751,
and that of the Supreme Court of
Vermont, in The Farmers Bank v.
Rathhone, has, however, a tendency
to limit this proposition to those in-
stances, where the creditor is igno-
rant of the true nature of the trans-
action, at the time of taking the note
or bill, which he seeks to enforce
against the maker or acceptor; and
the recent cases of Pooley v. Ilarra-
dine, 7 Ellis & Blackburne, 430 ;
and Davis v. Stainbank, 6 De Gr.
M. & Gr. 679, would seem to show,
that the English courts have reverted
to the doctrine of Laxton v. Peat, 2
Campbell, 185, where the point was
originally ruled the other way, and
will not permit the creditor to ex-
tend the time for payment, even
when the surety has bound himself
directly and primarily, by a negoti-
able instrument, for the accommoda-
tion of the principal. The question
arose in both these instances in equity,
but is not less decisive of the equi-
table principle, and of the rule which
should be followed in those courts of
law, which have adopted the rules
and maxims of equity, when sureties



are in question. And we may, at all
events, believe, that even if an ac-
commodation maker of a note has not
the privileges of a surety, he should
not be shut out from those rights which
belong to a principal debtor, or de-
nied protection against any wrongful
act of the creditor, by which he is
deprived of a remedy or security,
which would otherwise have been
available, as a means of payment or
indemnification. Whether, therefore,
the release of the endorser of a note
will discharge a maker, who has exe-
cuted the instrument for the accom-
modation of the endorser, should, as
it would seem, depend on whether it
will preclude the maker from suing
the endorser, if compelled to pay the
note to the holder. And there can
be little doubt, that the loss or sur-
render of the securities held for the
payment of such an instrument, will
have the same effect in discharging
the maker, whether the estate or pro-
perty which they bind belongs to a
third person, or to the endorser; it be-
ing well settled, that the securities
given for a debt are a trust, for all
who are interested in its payment,
which must be executed with fidelity
and diligence, at the risk of releasing
those who are injured by its violation,
whether liable as sureties or principal
debtors : see 2 American Lead. Cas.
350, 4th ed.

It is, obviously, easy to pass from
these premises, to the conclusion, that
those who have bound themselves as co-
obligors or co-contractors, should not
be allowed to show that their true
character is that of sureties ; and the
law was so held in BuH v. Allen, 19
Conn. 101 ; The Claremont Bank v.
Wood, 10 Vermont, 582, and Yates



REES V. BERRINGTON.



571



v. Donaldson, 5 Maryland, 389 ;
while it seems to have been thought
in Strong v. Foster, 17 C. B. 201,
that the rule is the same in equity,
and precludes the right to prove sure-
tyship by extrinsic evidence, when it
does not appear on the face of the con-
tract. But the weight of authority
is the other way, and establishes that
extrinsic evidence is admissible in
equity, for the purpose of showing
that one of the parties to a joint con-
tract is merely a surety, and entitled
to protection as such, against the acts
of the others, whether bound by the
obligation of the contract or entitled
to enforce it; Harris v. Brooks, 21
Pick. 195 ; Carpenter v. King, 9
Metcalf, 511 ; The Branch Bank v.
James, 9 Alabama, 949 ; Davies v.
Stainbank, 6 De G. M. & G. 679;
Hollier v. Eyre, 9 CI. & F. 1, 51 ;
Pooley v. Harradine, 7 Ellis & Black-
burne, 431, 434, 441 ; 2 American
Leading Cases, 403, 4th ed. But al-
though this is the well settled doc-
trine of equity, it was said in the
principal case, that it did not prevail
at law ; and that a surety who has
bound himself as a co-obligor by an
instrument under seal, is estopped
from showing the real nature of his
obligation as a defence to an action.
Such seems to be the rule at law in
England at the present day ; Ashbee
v. Pidduck, 1 M. & W. 564 ; and the
same view has been taken in many
of the cases in this country ; Ward
v. Johnson, 6 Munford, 6 ; Steptoe's
Ad'rs v. Harvey's Ex'rs, 7 Leigh,
501; Deberry v. Adams, 9 Yerger,
52 ; Dozier v. Lea, 7 Humphreys,
520; Pintard v. Davis, 1 Zabriskie,
632. This estoppel is generally treat-
ed as existing only where the contract



is under seaf; Tate v. Wymond, 7
Blackford, 240; Locke v. The United
States, 3 Mason, 446; although
there would be more reason in hold-
ins in accordance with the decision
in Yates v. Donaldson, and Bull v.
Allen, that it arises whenever the ob-
ligation of the surety is prima facie
that of a principal, whether support-
ed by a seal, or merely by a conside-
ration.

It may, notwithstanding, be doubt-
ed, whether there is any sufficient
reason for withholding from any party
to a contract, the right to show, that
he is merely a surety, unless he has
expressly agreed to be bound as a
principal. Every estoppel must be
express and certain, and ought not to
be extended collaterally to matters
not directly within its terms. A party,
who has bound himself to a direct and
immediate performance, is undoubt-
edly estopped from showing, that his
obligation is that of a guarantor, and
that he is to be answerable only
in case of the default of a co-con-
tractor or other person. But evidence
that one of the parties to the con-
tract is a surety, does not exonerate
him from the duty of direct and im-
mediate performance, and merely es-
tablishes the existence of certain re-
lations with the principal, which the
creditor is bound to respect. It has
long been well settled, that the rela-
tion between the parties liable for the
performance of a contract, is not de 7
pendent upon its terms, and that they
are not estopped from showing, that
as between themselves, the duty of
performance rests exclusively upon
one, although both are equally bound
as it regards the opposite party ;
ante, vol. 1, p. 170. And it is



572



DISCHARGE OF SURETY.



not easy to see, why there .should
he any greater difficulty, in proving
the existence of this relation, when
the suit is brought directly upon the
contract. The effect of such evidence
is not to vary the obligation of the
contract, but merely to show the ex-
istence of certain collateral rights and
liabilities between those who are liable
for its performance ; The Farmers
Bankx. i?u£/i&orce,26Vermont,19,34.
It is accordingly well settled, in most
of the states of this country, that ex-
trinsic evidence may be given at law,
as well as in equity, for the purpose
of showing, that one of several par-
ties, to a joint and several contract,
under seal, or by parol, is a mere sure-
ty, even when he appears on the face
of the contract as a principal ; Har-
ris v. Brooks ; Carpenter v. King ;
Pain v. Packard, 13 Johnson, 174;
Schroeppcl v. Shaw, 5 Barbour; S.
C. 3 Comstock, 446; Artcher v.
Douglass, 5 Denio, 509 ; Ad'or of
WiUon v. Green, 25 Vermont, 450 ;
Holt v. Bode?/, 6 Harris, 207; 2
American Lead. Cases, 436, 4th ed. ;