Lowe v. Reddan

123 Wis. 90 | Wis. | 1904

Maeshall, J.

Many questions are presented for consideration on this appeal, tbe solution of ■which does not appear to be material to tbe final conclusion, and will, therefore, not be-discussed.

Assuming for tbe purposes of this case, but by no means-even suggesting that such is tbe law, that a bank having the-opportunity to protect a surety upon a note held by it, by asserting its right to offset against tbe same its indebtedness to tbe principal maker thereof upon his open deposit account

It owes to tlie surety the duty to exercise such opportunity, and that a failure to do so can be taken advantage of by such •surety as regards his' liability to the bank, such duty is based upon mere principles of equity and cannot therefore be extended further than to fully satisfy the reason of the rule. That is fully accomplished by considering the note paid, as to the surety, to the extent of the amount of the maker’s credit with the bank, which it has a legal right, at least, by asserting 'its right of offset, to apply thereon. To carry the rule further •and hold that a mere partial release of the deposit account to the prejudice of the surety’s equitable rights will operate as a full discharge of the latter’s obligation, as in the case of the variation of a contract to his prejudice, the performance of which he is surety for, could only occur by confusing the legal relations between the obligee and the surety in the latter case with the pure equitable relations existing in the former case. In the latter case no contract exists between the bank and the' •surety upon the note, as regards the mere deposit account. None at all. Its right to protection in the circumstances ■stated grows out of equitable principles, as in Plankinton v. Gorman, 93 Wis. 560, 67 N. W. 1128. It will be observed 'In reading that case that, while the surety was held to have been fully released by a release of the security, the proof was that such security was sufficient, had it been enforced, to fully discharge the debt. It would seem that on principle the law must be as stated. Ample authority is cited by counsel for appellant to demonstrate that it is. Hoyt v. French, 24 N. H. 198; Hurd v. Spencer, 40 Vt. 581; Montgomery v. Martin, 94 Ga. 219, 21 S. E. 513; Holland v. Johnson, 51 Ind. 346; Freaner v. Yingling, 37 Md. 491; Dawson v. Real Estate Bank, 5 Ark. 283; Baker v. Briggs, 8 Pick. 122; and 1 Brandt, Suretyship, § 426. The cases to the same effect, which might be added, are numerous. The following are but a few of them: Morgan v. Comm’rs, 82 Ind. 257-262; Sample v. Cochran, 84 Ind. 594; Weik v. Pugh, 92 Ind. 382-386; Allen v. Hollingshead, 155 Ind. 178-185, 57 N. E. 917; Wright v. Bartlett, 43 N. H. 548; Calvert v. London Dock Co. 2 Keen, 638; Phares v. Barbour, 49 Ill. 370; Taylor v. Jeter, 23 Mo. 244; Pfirshing v. Peterson, 98 Ill. App. 70; Teaff v. Ross, 1 Ohio St. 469-475; Steele v. Mealing, 24 Ala. 285-290; Henderson v. Huey, 45 Ala. 275; Miller v. Berkey, 27 Pa. St. 317. The following from the opinion of’ Buack, O., in Weih v. Pugh, supra, fairly indicates the character of such authorities:

“It is a settled principle, that a surety is entitled to the1 benefit of all securities for the debt that are held by the creditor, and it follows from this right of subrogation that the: creditor cannot, without the surety’s assent, surrender, release, waste or render unavailable to the surety any of such’ securities, without affecting the creditor’s remedy against the-surety; but the surety is discharged on such ground only to-the extent to which the creditor has parted with such securities.”

Such cases as Paine v. Jones, 76 N. Y. 274; Gardner v. Van Norstrand, 13 Wis. 543, 544; Sage v. Strong, 40 Wis. 575; Stephens v. Elver, 101 Wis. 392, 77 N. W. 737; Cowdery v. Hahn, 105 Wis. 455, 81 N. W. 882, and similar au--thorities that might be cited, upon which counsel rely, and which seemingly, it is supposed by them, are in conflict with those we have cited, apply only, as the learned counsel for the-respondent contends, to cases where the contract itself, in respect to which the surety is bound, is changed to his prejudice, without his consent. That is not this case. An entirely different rule applies to one situation than to the other. There was a claim made here that the contract between the-principal maker of the note and the bank was changed to the-prejudice of the surety, without his consent, by the extension of the due date of the note. On that point, however, the appellant prevailed.

Counsel for the appellant insist that, conceding the law to-be as we state it, the court erred in deciding that only $259.68-of the deposit account was applicable to the note, instead of the full amount of such account, $519.36. Such contention does not seem to merit much attention. There were two notes, ■exactly alike, one being the note in suit. The right, as regards the deposit account, was manifestly the same in respect lo one note as to the other. If, as to the surety, it should have been applied in payment of the notes, so far as it would go for that purpose, certainly the court applied it rightly, one-half to each note.

By the Gourt. — Judgment is affirmed.