Cox v. Mobile & Girard Railroad, 37 Ala. 320

Cox v. Mobile & Girard Railroad

37 Ala. 320 | Ala. | 1861

R. W. WALKER, J.

It is said in, many of the cases, that, to discharge a,surety by extension of the time of payment,. there must not only be a sufficient consideration, but the time of the extension must be definitely and precisely fixed.- Gardner v. Watson, 13 Ill. 347; Parnell v. Price, 3 Rich. L. 121; Wadlington v. Gary, 7 Sm. & M. 522; McGee v. Metcalf, 12 Sm. & M. 535 ; Freeland v. Compton, 30 Miss. 424 ; Miller v. Stein, 12 Penn. St. R. 383, 389 ; Alcock v. Hill, 4 Leigh, 622; 1 Pars. Contr. 173 ; President *323of Police Board v. Covington, 26 Miss. 470 ; Burke v. Cruger, 8 Texas, 66 ; Thornton v. Dabney, 23 Miss. 559; Miller v. Stern, 2 Barr, 286.

It is undoubtedly true, that a mere indulgence, determinable at the will of'the creditor, will not discharge the ■surety ; and it is to indulgences of this character, that the cases just cited must be held to refer.

The principle to be .extracted from the authorities is, that where the creditor; -upon sufficient consideration, and without the consent oí the surety, makes an agreement with’.the principal debtor,.- the effect of which is to postpone the period at which the performance might have been compelled in due course- of law — in .-other words-, if, by a valid agreement, the creditor precludes himself from .pro ceeding against the principal, after the debt is due, according to the terms of the original contract, even ..for a moment, the surety is discharged. And the true ground on which the surety is relieved in such cases, is-the presump-five injury to him, arising from.the fact.that such an arrangement obstructs bis right to pay up/the money as soon as it is due, thereby acquiring the power of immediately pursuing the debtor, and that it otherwise impairs the remedies which the surety may find necessary for his protection. If the creditor has^tied up his hands, so that he could not himself immediateljtypursue the debtor,- then the surety could not do so, either on paying up the debt, or filing his bill quia timet; for-he can only be substituted to such rights as the creditor has .-Norris v. Crummey, 2 Rand. 323, 334-38; Hunter v. Jett, 4 Rand. 104; Chicester v. Mason, 7 Leigh, 244, 253; Bangs v. Strong, 7 Hill, 250 ; S. C., 4 Comstock, 315, 325 ; Comegys v. Booth, 3 Stew. 14 ; Rathbone v. Warren, 10 Johns. 587 ; Addison Cont. 70, and cases cited; 2 Am. Lead. Cas. 176; Draper v. Romeyn, 18 Barb. 169.

In Haden v. Brown, (18 Ala. 641,) it was held, that where there was an agreement, on .sufficient consideration, postponing the day of payment of a bill of exchange, although it may not be shown how long, or to what particular time, *324the payment is agreed tobe .postponed, the principle above stated applies, and operates The discharge of the surety. In support of this proposition .the court said : “It is contended, .that the plea, which was demurred to, is insufficient, in as much -as it does not show how long,- or to what particular time, the payment-of the bill was agreed to be postponed. But we think «that; this objection cannot be sustained. A surety has the'.right to.-stand on the precise terms -of his contract, and is discharged if those terms are altered without his consent,¡whether.the alteration consists .¿m the amount, of-the obligation, or the.time or manner of performing it. — McKay v. Dodge, 5 Ala. 388; Bangs v. Strong, 7 Hill. 250. Nor is it material, whether such .alteration is prejudicial to «the surety -or not. The only question is, whether the contract has been changed without his consent; and if it be found thatitdias been, the surety is discharged; for, never having assented to the new contract introduced byithe change, he is .not bound thereby. Testing the plea by this rule,'we think it is substantially good. It .avers,, that for a valuable consideration, moving from-the drawer of The bill.to the plaintiff’s testator, who .was the holder, The day. of .payment was postponed. If so, the contract was changed,- and the defendant discharged, unless he assented to the alteration. -It. may be true, that an agreement between theprincipal debtor and the creditor, which does not stipulate .for .any precise time, but leaves the legal right in the creditor to sue for, .or demand the money due by the contract, at any moment, does-not work a change of The contractas to 'the time of payment. But, wheni the.day .of «.payment is postponed by an agreement founded on a-siiffieient -consideration,Then it cannot be said that the time of payment .has not been altered.”

In the «present case, the Time.of payment .fixed-by the note itself was the 1st day of January, 1851. By the original .contract,-to which the surety •• was a party, The creditor «might, have demanded payment-on that day, and, ■ on default -of ¡payment, might have brought suit on the •note- -on the next d^y. - On the facts supposed in the- charge *325which the court was asked to give, the creditor, without the consent of the surety, and for a valuable consideration,' made an agreement with the principal debtor, whereby the day of payment was postponed beyond the 1st day of January, 1851. For a sufficient consideration, the creditor gave up his right to démand payment'ou'the 1st January, or to institute suit ondhe 2d. Under Iris-new agreement, he had not the legal right to do either of these things. It matters not that no other day of payment was specifically agreed upon by the parties. By a valid contract, the creditor’s hands are tied, for at least one day; and it is sufficient for the discharge of the surety, that the creditor has, by something obligatory;, deprived himself, for a single day, of the right of*demanding payment and bringing suit. For as, under the-snpposed"contract, the creditor could not have demanded payment on the 1st of January, or commenced suit on the 2d; so, the surety could not, by paying up the debt on the 1st, have* acquired the right of immediately.,' pursuing the debtor. If the agreement bad been, that the day of payment of the note should he postponed to a time beyond the 8th of January, 185-1, it would hardly be con-' tended, that the surety was not discharged, although no other day of payment was specifically fixed upon by the parties. An agreement, which legally prevents the creditor;. for a single day, from enforcing collection, has, as to the surety, the same effect as a contract which ties his hands for seven days. In both cases, there is a binding- contract; by which the creditor is precluded from -suing'-upon the contract, as soon as he bad the right to sue according to its original terms. — Draper v. Romeyn, 18 Barb. 166. The decision in Haden v. Brown, supra, appears to be precisetyin point; and, ou the authority of that case, we must hold, that the charge asked should have been given. — See Dickerson v. Board of Comms., 6 Indiana, 128, 134; Fellows v. Prentiss, 3 Denio, 512, 518, 521; 3 Leading Cases in Eq. 561, (3d ed.) and cases cited; King v. Upton, 4 Greenl. 387 ; 2 Am. Law Reg. 387.

[2.] Merely giving further time of payment to tbe prin*326cipal debtor, without the consent of the surety, does not discharge the latter : time must be given in pursuance of a valid contract for that purpose, which ties the hands of the creditor, so that he cannot sue if he would. The contract for further time is not valid, unless founded upon a sufficient legal consideration. A promise, on the part of the debtor, to pay usury in future, is an engagement which the law pronounces utterly void, and is, consequently,, no» consideration whatever for a promise by ¡the creditor, to» give further time of payment. Such a contract for delay, not being binding on the creditor, does n4i discharge- the surety. The first charge given by the cenrt rests upon the hypothesis, that the consideration of the- agreement for delay'.was “.usurious interest agreed to betpaid by deck-ley” — that isf/to say, an executory undertaking on the part of the debtor to pay usury'¿thereafter. That such a contract does net discharge the surety, is expressly decided m-Kyle v. Bostick, 10 Ala. 589 ; and to the same effect are Tudor v. Goodloe, 1 B. Mon. 322; Pyle v. Clark, 3 ib. 262 ; Scott v. Hall, 6 ib.287 ; Roberts v. Stewart, 31 Miss. 664; Vilas v. Piercy, 1 Comst. 274, 286 ; and Standelift v. Allen, 14 Ver. 258.

In Kyle v. Bostick, (supra,) there is a dictum, to the effect that, “ if the money had been in fact paid by the debtor, instead of a- promise to^pay it merely, the case would be different.” — 10 Ala. 595. The distinction here suggested, between. an executed and au executory usurious contract — between the payment of usury in advance, and .-a mere .promise-to pay it in future — as the foundation .for a promise on the part of the creditor to give further time, has been recognized and acted upon in several cases decided by the'Kentucky court of appeals.— Kenningham v. Bedford, 1 B. Mon. 325 ; Pyle v. Clark, 3 ib. 262 ; Scott v. Hall, 6 ib. 285; Patton v. Shanklin, 14 ib. 15. See 2 Am. Lead. Cases, 173, 179 ; Anderson v. Mannon, 7 B. Mon. 218; Duncan v. Reed, 8 ib. 382. While these cases recognize the principle, that a promise to pay usury at a future day, is no consideration for an agreement *327for an extension of time by the creditor, they hold that, if the usury is actually paid down at the time of the promise to forbear, and as the consideration for such promise, the surety will be discharged. The soundness of this distinction has been denied in New York, and it ip there held; that neither the promise to pay, nor the actual payment of usury, is a good consideration for a promise by the creditor to give time; and th.at a contract for delay, founded On either the one or the other, does not bind the creditor, or discharge the surety. — Vilas v. Piercy, 1 Comst. 274, 286-7-9. None of the exceptions taken in this case distinctly present the,Question here alluded to, and we will not pass upon it at this time.

Judgment reversed,-and -cause remanded.